The Trump administration's sweeping cuts to science budgets are delivering a direct blow to small and medium-sized technology companies engaged in research and development. Industry observers have criticized the administration's moves as a "war on science."
According to Politico on the 8th (local time), budget reductions recommended by the newly established Department of Government Efficiency (DOGE) have forced numerous small tech firms to cut staff due to declining revenues or increase their reliance on overseas markets. The administration's science budget cuts are sending shockwaves through the small businesses that hold government contracts. The administration's policy notably includes slashing basic science funding by more than half.
The Trump administration's fiscal year 2026 budget proposal, released last year, centers on cutting major science agency budgets by 40-50%. Specifically, the administration's targets narrow to climate and environmental programs and diversity, equity, and inclusion (DEI) initiatives.
Under the budget proposal, the National Institutes of Health (NIH) faces a 40% cut, while the Environmental Protection Agency (EPA) budget is slashed by 54%. The Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE) and the Advanced Research Projects Agency-Energy (ARPA-E) face cuts of 74% and 56%, respectively. The Office of Oceanic and Atmospheric Research under the National Oceanic and Atmospheric Administration (NOAA) and NASA's STEM education division have been eliminated entirely. DEI-related policies across agencies have been deprioritized or effectively abolished.
A larger concern is the 55% reduction to the National Science Foundation (NSF), which supports basic science research. Since April last year, new research grant funding has fallen to its lowest level since the 1990s, and multi-year project budgets have been placed on hold.
Congress, however, has not acquiesced to Trump's efforts. Last month, the U.S. Senate passed a budget bill blocking the administration's cuts. While major science agency budgets will remain at current levels for now, the administration is deploying various administrative measures to circumvent budget execution.
White House spokesperson Kush Desai told scientific publications including Nature: "The Trump administration is committed to cutting taxpayer funds going to left-wing pet projects disguised as 'scientific research' and restoring the American people's trust in science and public health institutions that was damaged during the COVID era."
Politico noted that "the administration has frozen or canceled numerous federal research grants and altered or deleted federal databases and scientific websites," adding that "many researchers have characterized this as a broad attack on American science." The reduction of 220,000 federal employees—approximately 10% of the total workforce—last year has also created staffing gaps burdening the scientific community.
The Trump administration's broad tariff increases last year have dealt additional damage. The head of an atmospheric technology company whose revenue fell by half told Politico: "We've had financially difficult times before, but I've never felt like the federal government was determined to kill us. This is a 'war on science,' and we scientists are the targets."
The termination of the Small Business Innovation Research (SBIR) program and caps on research indirect costs are also raising concerns. Jerry Glover, Executive Director of the Small Business Technology Council, warned: "Limiting indirect costs to 15% will hurt small businesses, especially micro-enterprises, who will receive less money when they get paid."