Explainer: How Proposed U.S. Budget Cuts May Change Foreign Aid in the Americas

The administration’s budget proposal intensifies a contraction in U.S. spending on international programs that the president initiated at the start of his second term. Despite Congress having approved the budget allocations for fiscal year 2025, Trump used an executive order on his first day in office to initiate a 90-day freeze on foreign aid so that programs could be reviewed. In the ensuing weeks, the administration began to announce agencies' layoffs and budget slashes. The Department of Government Efficiency, or DOGE, led by Elon Musk, spearheaded the effort. By March, Secretary of State Marco Rubio announced that 83 percent of USAID contracts would be cut. The agency, which employed a global workforce of 10,000 at the start of the year, is now reduced to 15 employees working under the State Department. Through executive orders, Trump nixed the budgets of smaller federally chartered or funded organizations that do international work, including in Latin America, such as the Inter-American Foundation, the U.S. Institute for Peace, the National Endowment for Democracy, the Wilson Center, and the U.S. Agency for Global Media.

Where is the $9.6 billion in new spending going? The U.S. International Development Finance Corporation would get $3 billion. The World Bank’s International Development Association's allocation would be $3.2 billion over the next three years. And a new flexible funding mechanism, known as the America First Opportunity Fund, would have nearly $3 billion, per the proposal, to promote strategic investments that support allies, facilitate repatriation flights, and counter China. Although these three funds may channel money to Latin America, details on which programs will be funded, and which department or organizations will administer them are not set in the budget.

Overarching cuts are numerous, though. The budget would see the elimination of $6.2 billion in global health spending, $3.2 billion in humanitarian aid, and $1.6 billion in food assistance provisions. Spending on State Department and USAID operations would be reduced from the 2025 budget by $2.4 billion. 

Other agencies that receive federal funding or are federally chartered that perform work in the Western Hemisphere, and faced cuts during Trump administration's first 100 days, would have their funding zeroed out if the proposed budget is approved. That includes the Inter-American Foundation, which had 425 active projects in 27 countries at the start of the year and receives both federally appropriated funding as well as private money. It’s also the case for the U.S. Institute of Peace, which does grant work throughout Latin America, especially in Colombia, and the National Endowment for Democracy, which supported projects in 16 countries in the region in 2023, spending $42.6 million. The budget proposal also continues the elimination of funding for the Wilson Center, which houses scholars who work on Latin America, and the United States Agency for Global Media, which runs Voice of America (VOA). VOA publishes news on the region in English, Spanish, and Portuguese.

How would these proposed cuts affect Latin America? The United States has long been the world’s largest source of foreign aid. In 2023, the last year for which complete data is available, the government disbursed $80 billion in international assistance programs. Five percent of that—$3.7 billion—went to the Western Hemisphere. In Latin America, programs ranged from food assistance to aid for Venezuelan migrants, HIV/AIDS programs in Haiti, anti-trafficking supplies in Panama, literacy programs in Honduras, nutrition initiatives in Guatemala, forestry management in Peru, and anti-narcotic efforts in Mexico and Colombia. Many of these programs were run directly by U.S. agencies like USAID, overseen by local and regional organizations but paid for by the United States, or administered in partnership with international organizations like the United Nations or the World Health Organization. The proposed budget would cut all voluntary contributions to both of these organizations. 

As the United States changes its international policy, what did foreign aid look like in Latin America before Trump’s cuts and his proposed budget?