The Trump administration's sweeping plans to axe the US Agency for International Development (USAID) are poised to deliver a significant blow to humanitarian and development programmes across Latin America, paving the way for Beijing's increased influence in the region.

The administration has ordered a 90-day suspension of global aid – save for Israel and Egypt – and plans to slash USAID's workforce from more than 10,000 to merely 290 positions deemed "essential". The agency, which distributed roughly $44bn in global aid in 2024, is set to be folded into the State Department, ending six decades of independent operations.

The impact on Latin America, which received approximately $2.3bn from USAID in 2024, is expected to be particularly severe. Colombia, the largest recipient of US foreign assistance in South America, received nearly $385mn last year, with substantial funding directed towards emergency humanitarian aid for Venezuelan migrants and cocaine reduction programmes.

Brazilian environmental initiatives face significant uncertainty, with more than half of US assistance directed to environmental protection efforts. USAID's Partnership for the Conservation of Amazon Biodiversity, which supports Indigenous peoples and forest communities, stands as a notable casualty, as reported by the AP. The Roraima Indigenous Council, operating across 157,000 square kilometres of territory, has already begun laying off workers and cancelling activities due to funding uncertainties.

In Peru, the world's second-largest cocaine producer after Colombia, the agency disbursed roughly $135mn in 2024, partially financing alternatives to coca production through coffee and cacao farming programmes. The Peruvian government has pledged to continue crop substitution efforts without US funding, though questions remain about implementation capacity. Some regional experts point to Bolivia, which expelled USAID in 2013, as having achieved better results in controlling cocaine production through autonomous social control policies.

The cuts threaten to create a significant funding gap in the region's humanitarian infrastructure. According to EFE, even pooled EU contributions to Colombia amount to less than half of US aid levels, highlighting the difficulty of replacing USAID's resources. The timing proves particularly challenging as the administration simultaneously revoked temporary immigration status for approximately 600,000 Venezuelans in the US.

Central American nations face similar challenges. Guatemala's $275.3m in funding supports projects spanning justice, education, health and women's rights, whilst Honduras received nearly $100m in 2024 for education, health and anti-corruption initiatives.

Although a federal judge has temporarily blocked the decision, the administration's determination to restructure foreign assistance appears unwavering. Trump has stated the dismantling of USAID "should have been done a long time ago," whilst Elon Musk, leading the newly minted Department of Government Efficiency, slammed the agency as run by "radical left lunatics."

Critics, such as Steven E. Hendrix on America’s Quarterly, argue the planned merger with the State Department risks shifting focus away from long-term development objectives towards more immediate foreign policy concerns – something more in tune with Trump’s transactional foreign policy. USAID's technical expertise in implementing development programmes and efficient contracting capabilities have historically set it apart from the State Department's more diplomatically oriented approach.

The reduction in US assistance will likely create an opening for increased Chinese influence in the region. With USAID historically accounting for 47 per cent of global humanitarian assistance spending, the funding void presents significant challenges for Latin American governments already grappling with fiscal constraints.

Whilst some emergency humanitarian aid may receive limited exemptions, such as the $40.7mn recently earmarked for Haiti’s long-running security crisis, the broader dismantling of USAID's infrastructure threatens to sweep away decades of US soft power in the region. For programmes addressing root causes of migration, promoting environmental conservation and supporting long-term development, the impact could prove particularly devastating.

As governments across the region scramble to fill the funding gap, the true cost of this policy shift may not become apparent for years to come. But recent developments in Cambodia, where China swiftly provided a $4.4mn grant for vital landmine clearance after USAID's withdrawal forced local operations to suspend, already offer a stark warning. The dismantling of USAID will ultimately be measured not just in development outcomes, but in diminished US prestige across the global south, where Washington already suffers from a lacklustre reputation. 

Besides Beijing’s signature Belt and Road Initiative focused on infrastructure building, Chinese state lenders have already established a formidable presence in the region. The China Development Bank and Export-Import Bank of China have extended more than $120bn in loans to Latin American and Caribbean governments since 2005, primarily backing energy and infrastructure projects through oil-backed financing arrangements. The lending pattern suggests the Asian superpower is well-positioned to expand its footprint in the region just as US development assistance recedes.