Washington, April 16 (IANS) The row between Harvard University and US President Donald Trump escalated further after the elite university refused to accept far-reaching policy changes ordered by the White House, and Trump threatened to strip it of its tax-exempt status.

As it is Harvard University is facing a major financial setback after the Trump administration imposed a freeze on $2.2 billion in federal funding, following the university’s refusal to comply with a list of sweeping demands related to governance, campus policies, and civil rights enforcement.

Now, Trump has said that Harvard "should lose its Tax Exempt Status and be Taxed as a Political Entity" if the premier college does not agree to his demands to change how it runs itself, which would include a selection of students and authority for professors.

Tax-exempt status is "totally contingent on acting in the PUBLIC INTEREST," he said in the post on Truth Social.

The demands, originally issued in early April, called for the dismantling of Diversity, Equity, and Inclusion (DEI) offices, cooperation with immigration authorities in screening international students, and sweeping reforms to hiring, admissions, and internal governance.

On Friday, the Trump administration escalated the situation by sending a more detailed list of requirements, including an audit of student and faculty political views.

Harvard responded by publishing the letter and rejecting the proposed terms.

In a public letter addressed to students and faculty, Harvard President Alan Garber affirmed the university’s refusal to yield to government pressure. “We will not negotiate over our independence or constitutional rights,” Garber wrote. “No government should control what a private university teaches or whom it hires and admits.”

The Trump administration’s Joint Task Force to Combat Anti-Semitism responded by announcing the suspension of multi-year federal grants totaling $2.2 billion and a halt on $60 million in existing government contracts.

The task force criticised Harvard’s position, stating, “Harvard’s response today reflects a mindset of entitlement that must be addressed. Taxpayer funding carries with it the duty to uphold civil rights protections.”

The move comes in the wake of rising tensions on US campuses, many of which have been rocked by protests over the Hamas-Israel war in Gaza.

Several demonstrations escalated into confrontations with law enforcement and counter-protesters.

Critics, including President Donald Trump and several Republican lawmakers, have accused student protesters of supporting Hamas, which the US government and many other governments around the world designate as a terrorist organisation.