The USAID funding freeze, following the Executive Order issued by President Trump, has been making headlines and sending shockwaves throughout the development sector, and sparking widespread discussions on the extent to which these actions will have major impacts on development cooperation, and people’s lives, globally. These actions are of course not being taken in isolation. President Trump is also seeking to “solve” major conflicts in Ukraine and Gaza; has a stated interest in annexing foreign territories such as Greenland, Canada and the Panama Canal, whilst making unilateral changes to world maps; and, most recently, is introducing – and constantly changing – a raft of tariffs that have created unprecedented upheaval in world trade arrangements.
Much of this appears to be driven by an America First agenda, oriented towards the specific interests of a US audience. This isolationist, protectionist approach, relying on tariffs and trade deals that are extremely favourable to the US, is also connected with other very polarising, right-wing and often racist, anti-immigration and misogynistic views. Gender rights and women’s reproductive rights, equity, diversity and inclusion, and global development cooperation have all become natural targets for the US administration.
How critical are these cuts for financing development cooperation?
The United Nations estimates that $5–7 trillion in annual investment is needed to achieve the Sustainable Development Goals. The financing gap is large and growing, and unlikely to be met in full. The 2024 Financing for Sustainable Development Report estimates developing countries need $4 trillion in additional investment each year, more than a 50% increase from pre-pandemic estimates. Sub-Saharan African countries have the largest share of the financing gap, accounting for US$70 billion per year on average. The 2025 final report of the International Commission of Experts on Financing for Development paints a stark picture:
“The quantity and types of funding expected to finance global development, and the SDGs, haven’t materialised. Resources overall continue to flow from poor countries to rich ones; poorer countries receive less than the value of what they produce, but also bear all the risks. Problems of rising inequality, persistent famine, recurrent humanitarian crises, financial instability, slowing growth and fragmentation of international trade have persisted or worsened. Global risks linked to climate emergencies, global health crises and armed conflicts have increased. A growing number countries face debt repayment difficulties…..The world has entered a period of successive crises that have seriously affected the living conditions and prospects of its population, particularly the poorest and most vulnerable.” (UN, 2025)
The implications of financial cuts, including those of USAID, are therefore enormous. In 2023, the OECD reported a record high ODA of US$223bn, but in 2024, 8 countries announced cuts totalling $17bn over 5 years, all prior to ODA cuts in 2025 by USAID, UK and the Netherlands. In 2023, US assistance made up nearly 30 per cent of total global aid of $223.3bn contributed by 24 OECD countries. With a budget of $44bn a year, and active in 177 countries, USAID spent more than half of the roughly $70bn the US allocated to overseas development. The cut in USAID’s funding was compounded further by a rapid announcement from the UK about cutting its ODA budget from 0.5% to 0.3% of GNI in order to boost defence spending.
The problem of a trust deficit
Aside from the financial impact, perhaps the biggest problem with the freeze of USAID’s operations was its suddenness. Workers around the world were instructed to stop all funded activities, causing a seismic rupture in the global humanitarian and development sector, and beyond. Pulling the rug from under so many not-for-profits, big and small was short-termism in its worst form. In addition to the immediate damaging consequences for people’s lives, it has severed the trust and international partnerships that in many cases will have taken years to establish.
Since the USAID freeze was announced in January, global trust in support by the US has been severely undermined. Millions of people have already experienced devastating impacts globally, with life-saving medical and food-aid supplies stopped overnight. Waivers for emergency supplies were announced but as the USAID freeze remained for the staff, transportation and supply-chains needed to deliver them, millions of the most vulnerable people were left without the critical treatment and nutrition they need. Humanitarian work in refugee camps, hospitals and healthcare centres has stopped, as has funding to groups working on the frontline of the climate crisis.
These are global challenges, that all nations have a responsibility to try to tackle together. The stories that have emerged from charities and practitioners show that the impacts in the first week of the USAID freeze were devastating and wide-ranging. In addition to the volume of job cuts, work preventing the spread of HIV and Mpox have been halted, women’s health providers shutdown, and water and sanitation programmes suspended. Children were badly affected, with the administration of live-saving vaccines and provision of education effectively taken away from them overnight. Without funding for clinics offering sexual and reproductive health services, young women cannot take control of their lives. When funding is withdrawn from schemes to combat young men being fed disinformation, they become more easily recruited by malign actors and armed groups.
Implications for the future of ODA
Recent events have shown clearly that the traditional rationale for ODA is being seriously challenged. Aid has always been a mixture of humanitarian relief, long-term development and power projection. That has made it harder to sell to taxpayers as well as to recipient countries, where the idea of aid as an essentially benevolent endeavour has often been disputed. In order to alleviate poverty and malnutrition, and to mitigate the risk of future conflict, instability and extremism, investment in global development cooperation is urgently needed. Conflict is often an outcome of desperation, climate and insecurity. Development assistance should be spent on preventing this, not on its deadly consequences. For those contemplating further cuts to ODA, it is worth recalling that the decisions to cut aid are leaving those facing conflict, poverty and climate change to bear the cost of other countries’ financial choices, not least those choices made by the United States of America.
Peter Taylor, Director, Institute of Development Studies, UK
Peter Taylor is Professorial Fellow and Director of the Institute of Development Studies, UK. Previously he was Director, Strategic Development at the International Development Research Centre (IDRC), Canada, and led the Think Tank Initiative. He has worked at IDS as Head of Graduate Studies, and Leader of the Participation Team; as Education Technical Advisor with the Swiss NGO Helvetas in Vietnam; as Lecturer in Agricultural Education at the University of Reading, UK; and as an agriculture teacher in Botswana. He has research and teaching interests in global development cooperation, organizational development, and facilitation of participatory and social change processes.