KEY POINTS
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President Trump is threatening a federal takeover of New York City, following similar actions in Washington, D.C., and Los Angeles, and has filed a lawsuit to block the city’s congestion pricing program.
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The city’s economy is facing challenges from the administration’s policies, including a projected 17% decline in international tourism, and the slowest job growth in decades outside of a recession.
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The “One Big Beautiful Bill Act” is estimated to jeopardize the city’s financial stability by potentially causing 1.5 million New Yorkers to lose health insurance and leading to $13 billion in healthcare cuts.
President Donald Trump has escalated threats of a federal takeover of New York City, following similar actions in Washington, D.C., and Los Angeles. This comes as the city already faces significant economic and social challenges stemming from the Trump administration’s broader policy agenda, including trade wars, immigration policies, and federal budget cuts.
Threats of Federal Intervention
Trump stated he would “look at New York in a little while” after taking federal control of Washington, D.C.’s police force and mobilizing National Guard troops. In June, he also deployed the National Guard and Marines to Los Angeles. The President’s threats against New York City have intensified in recent months, particularly after Zohran Mamdani, a democratic socialist, won the city’s Democratic mayoral primary.
The Trump administration also filed a lawsuit to block New York City’s congestion pricing program, a critical revenue source for public transit upgrades. Furthermore, the administration warned it might withhold federal funding for transit projects if the city did not comply with its demands.
Economic Impacts
Despite New York City’s recent economic recovery from the COVID-19 pandemic and record-low crime rates, the Trump administration’s policies are reportedly undermining these gains. New York City Comptroller Brad Lander, who has endorsed Mamdani, stated that the risks to the city’s economy are “largely coming from Trump and the erratic nature of tariffs,” which pose “very real risks to the global economy and cities that are closely tied into it — New York City, first and foremost.”
The city’s private sector added only a net 956 jobs in the first half of the year, marking the slowest growth outside a recession in decades. The left-leaning New School’s Center for New York City Affairs noted in a July report that “Trump’s policies create conditions that will likely be inconducive to job growth in the near future.”
International tourism to New York is projected to decline by 17% this year, equating to 2 million fewer travelers. This downturn is primarily attributed to Canadian visitors staying home, a trend linked to Trump’s rhetoric and policies, including a past threat to annex Canada.
Policy-Driven Challenges
The Trump administration’s push for deportations is also reverberating through New York City’s economy, labor market, and immigrant communities. State officials and budget experts assert that the recently enacted “One Big Beautiful Bill Act” jeopardizes the city’s financial stability in the coming years.
According to state estimates, the bill could result in 1.5 million New Yorkers losing health insurance coverage and 300,000 households losing some or all of their SNAP benefits. Additionally, it could lead to $13 billion in cuts to New York’s healthcare system, potentially causing 200,000 job losses, and higher long-term energy costs due to the elimination of clean energy projects.
New York State itself faces a substantial $34 billion budget deficit, the largest since the 2008 financial crisis, following federal spending cuts and a softening economy, as reported by the state’s comptroller last week.
Political Ramifications
Many of New York City’s power brokers are expressing concern not only about Trump’s public attacks but also about the potential implications of Mamdani’s mayoral victory. Mamdani’s agenda includes freezing rents on stabilized units, making public buses free, implementing universal childcare, and building affordable housing. He plans to fund these initiatives by advocating for higher taxes on high-income earners and corporations, a stance that has drawn opposition from many business leaders.
Comptroller Lander acknowledged that the precarious fiscal landscape created by Trump’s policies could complicate Mamdani’s efforts to implement his ambitious programs. Funds needed to address federal cuts to Medicaid, SNAP, or housing assistance cannot be simultaneously used to expand social programs like childcare or free public transit.
