The Trump administration announced on Wednesday that it would withhold $18 billion in federal funds previously awarded to New York City for two of the largest infrastructure projects in the country.
The two projects — the expansion of the Second Avenue subway line and new commuter rail tunnels under the Hudson River — have been in the works for years and are aimed at alleviating bottlenecks and improving travel for millions of people and daily commuters in New York City and beyond.
Both are already underway after numerous starts and stops, with construction advancing on the tunnels, a $16 billion project known as Gateway that sits at the center of the busy Northeast Corridor.
Sean Duffy, the transportation secretary, said in a statement that funds for the two projects would not be distributed while the Transportation Department reviewed what it described as New York State’s “discriminatory, unconstitutional contracting processes.”
The review was in response to President Trump’s executive orders earlier this year targeting diversity, equity and inclusion programs, Mr. Duffy said, and following a rule issued by the department on Tuesday that forbids recipients of federal transit funds from mandating race- and sex-based contracting requirements.
The substantial funding freeze targeting the two projects also appeared to be intended to pressure Democrats to join Republicans in reopening the government. With Department of Transportation employees furloughed, the review could not begin, and federal funds could not be released for work already underway.
While federal funding for transit projects across the country could now be at risk, the department chose first to single out projects in the backyards of Representative Hakeem Jeffries, the Democratic House minority leader, and Senator Chuck Schumer, the minority leader, who have sparred with President Trump over the shutdown.
As the Trump administration has begun carrying out its threats to freeze and claw back federal funds from states and cities that promote diversity initiatives or do not cooperate with it on federal immigration enforcement, New York has been a main target, with hundreds of millions of dollars withheld.
But this funding freeze is the largest yet in New York and could have potentially widespread effects, disrupting a regional economy dependent on the movement of residents and commuters.
Like other efforts by the Trump administration to withhold or delay federal funding to New York, the decision is likely to be challenged in court.
The decision has caused confusion among the agencies overseeing the projects, including the Metropolitan Transportation Authority, which is managing the subway extension project that was expected to be open in 2032.
“The federal government wants to immediately ‘review’ our compliance with rules they told us about moments ago,” John J. McCarthy, the chief of policy and external relations at the authority, said in a statement. “We’re reviewing their tweets and press releases like everyone else. For now, it looks like they’re just inventing excuses to delay one of the most important infrastructure projects in America.”
Despite the Transportation Department’s announcement, work on both projects is still moving forward, for now. In a letter to the Gateway Development Commission, which oversees the tunnel project, a department official said the pause would “temporarily impact disbursements.”
It was not immediately clear whether the $18 billion involved just the Second Avenue Subway and the Gateway Project or other initiatives as well.
Gov. Kathy Hochul of New York described the announcement as the Trump administration’s latest salvo in its war on the state and its values. Earlier this week, Ms. Hochul said that the administration had cut an additional $100 million in counterterrorism funding in New York, following an earlier reduction of $87 million.
“They’ve decided to put their own interpretation of proper culture ahead of our needs, the needs of a nation,” Ms. Hochul, a Democrat, said at a news conference to discuss another topic involving Washington, the federal government shutdown. “You can’t make this up, folks. Just keeps getting worse and worse.”
Attorney General Letitia James of New York, along with a coalition of other attorneys general, won a court order this week halting the Trump administration from cutting funds to antiterrorism and public safety projects. A federal judge on Wednesday also temporarily blocked the Trump administration’s attempt to withhold millions of dollars in security funding to the transit system.
Former President Joseph R. Biden Jr.’s administration awarded the M.T.A. $3.4 billion in federal funding in 2023 to extend the Q line on Second Avenue from the Upper East Side into Harlem and East Harlem, an expansion of a project that has been in the works for more than a century.
The first phase of the Second Avenue subway line opened in 2017 after a decade of construction, adding three stations on the Upper East Side in one of the most expensive transportation projects ever. The extension would add two additional stations into East Harlem.
“This is a hit against working-class New Yorkers and the working-class neighborhood of East Harlem,” Representative Adriano Espaillat, a Democrat who represents the area, said in an interview.
In 2024, the Biden administration awarded billions in grants and financing for the Gateway Project, which would connect New Jersey and Pennsylvania Station in Manhattan with two additional tunnels, bringing the federal funding for the project to about $12 billion, about 70 percent of its total cost. The rest of the project would be provided by New York State and New Jersey.
On Wednesday, Mr. Schumer, a leading supporter of the Gateway project for years, said, “Obstructing these projects is stupid and counterproductive because they create tens of thousands of great jobs and are essential for a strong regional and national economy.”
Gov. Philip D. Murphy of New Jersey, a Democrat, said in a statement that Gateway was vital for commuters and that “a project of this importance should be above politics.”
At a news conference, Mr. Jeffries said the Trump administration’s decision to freeze the funds could threaten thousands of jobs in the region.
The Gateway Development Commission, which oversees the tunnel project, did not learn of the suspension until after its monthly board meeting concluded Tuesday.
And at a Senate hearing in May, Mr. Duffy told Senator Kirsten Gillibrand of New York that he would not cancel federal grants that had been awarded for the two projects. “If you’re asking me if I plan on canceling those grant agreements, I do not,” he said.
It is unclear when the federal funding freeze could affect the infrastructure projects, which also have local backers. But the disruption, regardless of length, could have costly, long-term effects, said Tom Wright, the president of the Regional Plan Association, an urban planning group.
The Hudson River project, for instance, involves complex agreements with companies across the country.
“This is the worst thing you can do to a project that’s going to take a decade and includes 10 contracts, each of which is over a billion dollars, and about half of which are in progress,” Mr. Wright said.
The funding freeze could also set a dangerous precedent that could make private contractors wary of working on major public projects without more and costlier assurances, he said.
And the longer the work is delayed, the higher the overrun costs will be. A month of delays could add tens of millions of dollars to the Hudson River project’s budget, Mr. Wright said.
Grace Ashford, Stefanos Chen, Michael Gold and Patrick McGeehan contributed reporting.
Matthew Haag is a Times reporter covering the New York City economy and the intersection of real estate and politics in the region.
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