Foreign Assistance After USAID

For more than six decades the U.S. Agency for International Development, created by President Kennedy in 1961, managed most American economic and humanitarian aid, from disaster relief and food assistance to global health programs. In early 2025 the new administration froze foreign assistance for review, placed most USAID staff on leave, and terminated the large majority of its grants and contracts. On July 1, 2025, the remaining USAID functions were formally moved into the State Department, which now manages the programs that survived.

Congress also reduced funding directly. A rescissions law enacted in July 2025 canceled about nine billion dollars in previously approved spending, most of it foreign aid, the first such package enacted in decades. Later that year the administration withheld several billion dollars more through a so-called pocket rescission, and in September 2025 the Supreme Court allowed it to keep those funds frozen while litigation continued. Some programs, including parts of the global HIV program PEPFAR, continued under State Department management.

Supporters of the overhaul argued that foreign aid had grown wasteful and poorly aligned with national interests and that putting it under the Secretary of State improves accountability. Critics, including many former officials and public health researchers, warned that abrupt cuts disrupted lifesaving programs, ceded influence to rivals such as China, and bypassed Congress's power of the purse. Remaining foreign aid flows through State, the Millennium Challenge Corporation, the Development Finance Corporation, and other agencies.