Turmoil at USAID: The USAID Restructuring Under the Trump Administration Examined
09/03/2025 - Written by Isabella Oedekoven Pomponi
Introduction
The Executive Order signed by President Trump on Inauguration Day freezing all U.S. foreign assistance pending a 90-day review period signaled his commitment to reducing federal expenditures and prioritizing an ‘America First’ approach to foreign policy. This placed the United States Agency for International Development (USAID) at the center of broader federal agency reform.
The Administration plans to comprehensively review all programs during the freeze, substantially reduce the agency’s workforce and international presence, and merge USAID with the State Department.
On February 26th, the Administration announced it plans to reduce USAID’s foreign aid contracts by 90%, and $60 Billion in overall foreign U.S. assistance globally.
Except for some emergency food programs and military aid to Israel and Egypt, the order called for all foreign assistance programs to cease until reviewed for efficiency and alignment with U.S. foreign policy objectives.
This shift represents an unprecedented diversion from the historic U.S. approach to foreign assistance strategies, raising concerns from domestic policymakers and the international community.
USAID Background
Established in 1961 by President John. F. Kennedy, USAID consolidated U.S. development efforts into a singular agency, designed to counter growing Soviet influence during the Cold War Era. It has served as a cornerstone of U.S. foreign policy and soft power initiatives worldwide since. USAID programs have addressed a wide range of global issues, including:
Post-conflict stabilization and reconstruction (Ukraine, Afghanistan, Iraq).
Climate resilience and environmental programs (food security initiatives in Africa).
Democracy and governance programs (Latin America [including funding opposition groups in States hostile to the U.S. and allies] and Eastern Europe independent media efforts).
Humanitarian assistance, disaster relief, and pandemic response (aid in conflicts, natural disaster assistance, and pandemics, including COVID-19).
The U.S. is the largest single donor to foreign assistance, with total expenditures reaching $71.9 billion.
USAID oversees nearly 61% of these funds. Despite misconceptions, foreign assistance spending accounts for less than 1% of the total federal budget and U.S. GDP.
Recent Developments by the Trump Administration
Since taking office, Trump has prioritised swift action in restructuring USAID, prompting legal and political challenges.
February 3rd: Announced that USAID merger with the U.S. State Department. Secretary of State Marco Rubio appointed as Acting Administrator.
February 4th: USAID employees were notified that all direct hires would be placed on leave unless deemed essential. Foreign-based employees instructed to return to the US within 30 days.
February 23rd: All USAID direct hire personnel, except for mission-critical functions, core leadership, and/or specially designated programs, were placed on administrative leave globally.
Legal Challenges: Federal employee groups, aid organizations, and government suppliers have challenged the Administration's blanket spending freeze. Judges have temporarily halted the spending freeze and employee suspension efforts, though the Trump administration has failed to comply.
Congressional Controversy: Senate Democrats raised concerns regarding the ethical and legality of DOGE's (Department of Government Efficiency) actions regarding their recent access to USAID’s Washington D.C. headquarters. DOGE remains controversial due to its unofficial and unconfirmed status, despite claims to be a government agency.
In a letter to Secretary Rubio, they raised concerns about the legality of DOGE accessing USAID headquarters and the forced administrative leave of senior officials who refused them access. In response, Musk stated that ‘USAID is a criminal organization. Time for it to die.’. Meanwhile, DOGE official Katie Miller, stated via X that ‘No classified material was accessed without proper security clearances’.
As of March 2nd, USAID’s website only contains a notice of planned Reduction-in-Force procedures. The Administration reportedly plans to keep fewer than 300 of the over 10,000 currently employed and consolidate reviewed programs under State Department authority.
Dismantling USAID: A Longstanding Policy Objective
The Administration’s aggressive action in reducing foreign assistance and restructuring USAID builds upon earlier Republican efforts.
In 2011, 165 conservative House Members proposed slashing or eliminating USAID. The first Trump Administration took several steps to prioritise an “America First” approach to its foreign policy and exert U.S. influence abroad.
Proposed merging USAID and State Department administrative services, but faced bipartisan opposition.
The 2017 Federal Budget Proposal recommended a 37% cut to USAID and State Department funding.
Increased aid conditionality, including as leverage in United Nations resolutions, and humanitarian aid.
Conservative think tanks, such as the Heritage Foundation, have long advocated for foreign policy to prioritise national interests.
These actions reflect a conservative shift in foreign policy to leverage reduced aid to advance U.S. foreign policy interests abroad, a sharp diversion from traditional approaches.
Key Players and Stakeholders
The reduction of USAID has impacted domestic and international stakeholders including:
The White House:
Trump publicly remarked that the agency was 'incompetent and corrupt’, though he has not provided evidence.
The Administration has tapped Peter Marocco to lead agency reform.
Secretary and Acting Administrator of USAID Marco Rubio:
Historically a staunch advocate for USAID and foreign assistance spending, Rubio now oversees USAID’s restructuring and program integration into the State Department.
The U.S State Department:
In a memo published on January 29th, 2025, 'Prioritizing America’s National Interests One Dollar at A Time’, the agency announced that the review period intends to "root out waste”, “block woke programs”, and “expose activities contrary to national interests”, signalling it adheres to the Administration’s America First agenda.
A Divided U.S. Congress:
Democrats have challenged USAID’s restructuring, and have historically advocated for the autonomy of USAID.
Republicans generally support cuts, criticising the agency’s priorities of advancing liberal social agendas and ‘wasteful’ programs, and have sought to reduce agency autonomy.
Elon Musk and DOGE:
Musk has amplified inflammatory comments and conspiracy theories about the agency on his platform, X.
DOGE, a controversial, unofficial task force, attracts significant controversy due to its unofficial status while auditing government agencies.
The Greater International Community:
The reaction from the greater international community has varied from concern, alarm, or praise, with various regions and international actors being impacted differently.
Concerned that USAID dismantling would significantly reduce capabilities in advancing Western democracy and development efforts and warn of China’s Belt and Road Initiative's influence.
The Center for Global Development (CGD) warns of a shock economic impact to multiple countries were spending to cease for a significant period.
The World Health Organization (WHO), which Trump withdrew from via Executive Order on Inauguration Day, warns of a 50+ country impact with health programs addressing HIV, polio, mpox, and bird flu efforts at significant risk.
Ukraine:
The largest recipient of USAID funds for health, agriculture, news organizations, energy infrastructure, and emergency services, faces dire consequences regarding the ongoing war with Russia were funds to cease or be reduced.
Traditional U.S. Adversaries:
Moscow and Belarus, far-Right leaders and parties in the Balkan States, Viktor Orbán, the Prime Minister of Hungary, and other policymakers have praised the Trump Administration’s decision to shutter the agency, criticising the agency as historically promoting pro-democracy efforts, civil society movements, and interfering with State sovereignty.
Opportunities and Risks
Opportunities:
Despite being controversial, some opportunities exist for the restructuring of USAID, if strategically managed.
1. Increased accountability and efficiency of funds
Opportunity: The Trump Administration hopes its restructuring efforts improve the program’s perceived lack of oversight and deviation from U.S. national interests.
A Targeted Review: A review of existing programs could eliminate redundancy and eliminate ineffective programs. Aligns with broader policy goals of increasing fiscal conservatism, and federal government reduction.
Strategic Consideration: If the review focuses on streamlining efficiency, rather than sweeping cuts, the U.S. could maintain its global influence and presence at a reduced cost.
2. Promoting U.S. National Interests Abroad
Opportunity: Advancing foreign aid programs that align with an America First agenda allows for targeted programs to specific regions, countries, and causes that benefit U.S. strategic interests (e.g., economic security, military partnerships, countering Chinese influence).
Increasing Aid Conditionality: The Trump Administration could condition aid to countries to their compliance in achieving U.S. foreign policy objectives.
Strategic Consideration: Aid conditionality must be balanced to not alienate allies or allow Chinese or Russian influence to grow in American absence.
3. Increased Private Sector participation in Multilateral Partnerships
Opportunity: The restructuring of USAID and reduction of U.S. foreign assistance spending may incentivise multilateral institutions to seek funding from private sector investment partners.
Public-private partnerships (PPP): May alleviate reliance on taxpayer-funded aid, promote diversified funding sources, and encourage market-oriented initiatives.
Strategic Consideration: Oversight measures may be necessary to implement to prevent excessive profit-driven motivations, at the cost of humanitarian impact.
Risks:
Despite restructuring USAID bringing some potential benefits, it brings significant diplomatic, economic, and security-related risks to the United States, its allies, and aid partners.
1. Diminishing of U.S. Global Influence, Presence, and Soft Power
Risk: The reduction in foreign assistance spending creates an opportunity for China and Russian influence to expand.
Actors: China’s Belt and Road Initiative, and Russia’s strategic aid programs intended to counter Western influence see an opportunity with USAID’s withdrawal. China has reportedly begun talks with impacted regions and countries.
Strategic Consideration: A complete freeze on efforts in strategic regions or countries may result in ceded ground to the U.S.’s competitors and negatively impact international reputation.
2. Destabilization of Fragile States and Economies
Risk: Were USAID funding to cease for a period greater than a year, the CGD warns of the following predicted economic impacts:
○ Economic shock of >1% of Gross National Income (GNI) to 23 economies.
○ Eight economies would experience a >3% shock.
○ The regions of sub-Saharan Africa and Afghanistan are at significant economic risk.
Risk: Shifting the burden of aid funding on fragile or weak governments may exacerbate political unrest, instability, and economic strain leading to increased grievances in their populations and the potential for domestic unrest.
Strategic Consideration: Rather than a blanket freeze, a phased reduction could mitigate shock effects felt from an immediate funding freeze.
3. Ceding Accountability Measures to Authoritarian Movements: Eastern Europe Independent Media
Risk: USAID funds independent news media outlets in Eastern Europe to which the funding freeze poses an existential threat. The Trump Administration has signalled that it will not continue foreign assistance to independent media, or pro-democracy initiatives in this region.
Potential Consequence: The loss of independent media decreases the ability to hold authoritarian movements to account, and threatens a free press environment.
○ Ukraine: Impacts of the freeze were immediately felt, with media organizations already beginning to scale back or shut programs. Difficulty in countering Russian media and propaganda would increase without fund continuation.
○ Belarus & Georgia: Independent reporting counters Russian media influence campaigns, and reporting on the Russia-Ukraine War is at risk of state suppression.
○ Bosnia and Herzegovina: Funding freeze threatens investigations into organized crime, corruption, and abuses of power.
○ Hungary: Countering Orban’s efforts to place media organizations under state control would be critically weakened.
○ The Organized Crime and Corruption Reporting Project (OCCRP) reported layoffs and warned that journalists’ safety is jeopardised.
Strategic Consideration: The European Federation of Journalists (EFJ) has called for European Donors to compensate for USAID’s funding withdrawal to continue media efforts, especially in Ukraine. Funding diversification may decrease USAID dependency and strengthen media resilience.
4. Alienation of U.S. Allies, Key Partners
Risk: The Trump Administration’s actions have already caused rifts with close allies and sparked international backlash. The U.S.’s inward withdrawal could undermine broader Western global diplomatic efforts and weaken traditional multilateral institutions.
Potential Consequence: U.S. allies and partners may interpret this move of the U.S. decreasing its international commitments and global leadership position, and seek to divest their reliance on the U.S. to alternative means of funding or leadership.
○ Key Example: The European Union (EU) announced it would send €6 Billion in military aid to Ukraine amid ongoing U.S.-led talks with Russia. Speaking to reporters after the talks, President Trump on February 18th, appeared to blame Ukraine for its ongoing conflict, remarking that ‘Russia wanted to end the bloodshed’.
○ The most recent, contentious and heated meeting between President Trump, Vice-President Vance, and President Zelensky has signalled fear of an extreme policy diversion of historical U.S. support to Ukraine’s war efforts.
The Administration has since cut the USAID initiative that invested hundreds of millions of dollars in energy grid restoration from Russian assaults.
The Administration has since paused all funding and support to Ukraine, including intelligence, until Ukraine “ensures that it is contributing to a solution.”
In response, United Kingdom’s Prime Minister Starmer hosted leaders of Europe, Canada, and NATO (North Atlantic Treaty Organization) for an emergency security meeting in London to discuss continued funding and a ceasefire agreement. Notably, U.S. leaders were absent.
○ If the U.S. softens its position on Russian aggression in Ukraine, it could signal to European allies that they may not be able to rely on the U.S. for continued security assurances.
Strategic Consideration: The U.S. would need to increase its diplomatic participation with key allies and partners for reassurance and transparency during the transition period, or allies and partners should begin preparations for increased self-reliance.
5. Humanitarian Consequences
Risk: The immediate freeze on foreign assistance spending has already impacted ongoing global health, education, development, and conflict relief efforts and programs, causing disruption and uncertainty. Experts warn of grave global health consequences were program spending to not continue.
Potential Consequence: The temporary or permanent cease of many programs may increase human suffering, decrease aid or treatment access for people, and increase mortality in impacted communities.
○ The suspension of PEPFAR (The President’s Emergency Plan for Aids Relief) has halted HIV treatment, testing, and prevention efforts in over 50 countries.
○ WHO chief Dr Tedros Adhanom Ghebreyesus has reported that health clinics globally have shuttered with workers put on leave.
Strategic Consideration: The U.S. could mitigate humanitarian impact, and consequential reputational risk, by ensuring a broader continuation of emergency and vital relief funding during the review period, or through alternative funding possibilities.
Policy Recommendations
To balance risks with opportunity, the Trump Administration and the broader international community could consider the following policy recommendations.
1. A Targeted, Phased Aid Review Plan
Instead of announcing a blanket freeze, with minimal exceptions, the Administration could announce a more gradual scale back of programs and shed insight on review updates.
Prioritise review or continuation of critical aid programs and programs in key strategic regions.
2. Improve Aid Efficiency and Accountability
By strengthening accountability measures, the Administration could improve aid delivery without sacrificing or eliminating aid entirely.
Leveraging aid conditionality could ensure that recipient countries and organisations adhere to broader U.S. interests.
Leveraging aid as a diplomatic tool could prove strategic with donor countries, organizations, and multilateral organizations, rather than eliminating support entirely.
3. Engage Alternative National, Multilateral, and Private Sector Partners for Funding
The U.S. could encourage and facilitate a transition to private-sector funding to continue existing programs.
The U.S. could encourage key allies to increase their contributions toward foreign assistance programs to ensure a smoother transition in program continuity.
○ Example: The United Kingdom, or NATO, could emergency funding to critical regions including Ukraine to prevent a media vacuum in the absence of U.S. media support.
Encourage private multinationals, non-governmental organizations, and funds to participate in humanitarian aid or development efforts.
Increase contributions.
4. Strengthening Multilateral Aid Mechanisms
Focus upcoming 2025 multilateral events and summits on strengthening internal funding and coordination efforts, to compensate for the loss of USAID and U.S. foreign assistance and security reliability.
Establish multilateral contact with impacted regions, communities, and countries for prioritised assistance to continue assistance.
Promote international partnerships, including the EU-African Union (AU) to counter growing Chinese and Russian influence in key regions.
Expand economic diplomacy and the encouragement of trade agreements to counter reliance on Belt and Road Initiative projects as a sole alternative.
Conclusion
While the Trump Administration’s efforts to swiftly restructure USAID align with its agenda of returning to a national interest-prioritised foreign policy, it brings substantial geopolitical, economic, and humanitarian risks if not properly managed.
Balancing improved efficiency while maintaining global presence is a vital challenge the Administration must achieve to preserve U.S. global leadership while curbing growing global Chinese and Russian influence. A complete withdrawal or substantial reduction in obligations could provide an entry point for Chinese or Russian capitalisation.
A more phased, strategic, and transparent approach to restructuring could alleviate concerns from allies and key partners while achieving broader goals of increasing accountability, reducing public spending, and minimising humanitarian risks.