The fate of the United States Agency for International Development (USAID), Washington’ primary vehicle for delivering foreign assistance worldwide, has hung in the balance since Donald Trump’s inauguration. The turmoil started with an executive order on Inauguration Day suspending U.S. foreign assistance for 90 days. USAID began laying off contract employees and recalled its overseas employees shortly after, with further plans to reduce its workforce of 10,000 to around 300. Although a February 8 court ruling temporarily blocked the administration’s efforts to place USAID employees on leave, the judge declined to block the funding freeze, leaving programs globally in limbo and nongovernmental organizations scrambling to provide aid and services.
The dismantlement of USAID will likely decrease the United States’ global standing and cede influence to China. Although Beijing is unlikely to entirely make up the shortfall USAID’s frozen funds leave behind, experts noted that Washington is allowing China to expand its soft power influence at a time of increasing competition between the two countries. Indeed, Beijing has already started filling the void left behind by the United States, providing an extra $4.4 million to support Cambodia’s demining operations in the wake of the USAID funding freeze.
The move could have dire implications for Taiwan’s foreign policy interests, and policymakers in Taipei must take proactive measures to contain the potential fallout.
The broad freeze on foreign assistance also included the suspension of military aid to Taiwan. Taiwan had not received U.S. aid, economic or military, since 1979, when Washington normalized relations with Beijing. Although the United States continued arms sales to Taiwan, it was not until late December 2022 that Congress passed legislation enabling then-President Joe Biden to utilize drawdown authority to provide military aid to Taiwan again. This was followed by a significant uptick in military assistance to Taiwan, surpassing $2 billion in 2024. In December 2024, Biden authorized $571 million in military aid to Taiwan shortly before leaving office. That’s now on hold amid the larger aid freeze.
However, despite the Trump administration’s unpredictability and the president’s ambivalent attitude, the aid suspension for Taiwan is likely only temporary. Indeed, the Taiwanese representative to the U.S., Alexander Yui, has already commented that Taipei and Washington have a “mutual understanding” on military aid. Moreover, Taiwan currently enjoys strong bipartisan support from both U.S. political leaders and the public. A recent survey by the Chicago Council on Global Affairs and the University of Texas found that political leaders across the aisle support utilizing the U.S. Navy to break a potential Chinese blockade of Taiwan. Likewise, the American public supports giving Taipei economic and military aid and imposing economic and diplomatic sanctions should China choose to invade Taiwan. Trump appointees such as Secretary of State Marco Rubio and National Security Advisor Michael Waltz are well-known China hawks who have consistently shown strong support for Taiwan. Thus, the military aid suspension is likely to only be temporary for Taiwan.
Nonetheless, Taiwan’s interest will still be impacted by the freeze on aid to other countries. It is essential to remember that USAID’s mission has never been divorced from advancing the foreign policy interests of the United States and its allies. Its very founding was meant to counter Soviet influence during the Cold War.
USAID’s dismantlement will negatively affect Taiwan in two ways.
First, Taiwan may be indirectly harmed by receding U.S. influence, especially if the suspension of foreign aid signals a broader restructuring of American interests abroad and a pivot toward an “America First” agenda with narrower involvement and less support for allies and strategic partners abroad. Even if these actions do not herald an era of a more disengaged United States, they could negatively impact the U.S. ability to use economic means to deter and respond to China.
Since taking office, Trump has threatened or targeted longstanding U.S. allies and partners, including Canada, Mexico, South Korea, and Japan, with tariffs and said he intended to impose tariffs on Taiwanese semiconductors. The tariffs, threatened or imposed, raised barriers and uncertainty for trading with the United States and could corrode Washington’s ability to use economic statecraft in the future. Indeed, countries, including U.S. allies, have started taking measures to restructure their trade networks to bypass the United States. Isolation from the trade network reduces U.S. foreign policy maneuverability by decreasing the United States’ non-military leverage. All these will make it challenging for the U.S. to signal its commitment to Taiwan and diminish its capacity to muster a coalition, economic or otherwise, to respond to or deter Chinese threats in the Taiwan Strait.
Second, USAID has been active in helping Taiwan implement its foreign policy agenda and expand its international reach. Taiwan’s International Cooperation and Development Fund (TaiwanICDF) and USAID have collaborated on multiple initiatives to bring development assistance to Taiwan’s diplomatic allies. This included offering technological assistance to Caribbean and Pacific allies, supplying development assistance to Paraguay, and cooperating on providing the Women’s Livelihood Bond (WLB) to Southeast and South Asian countries.
These programs currently make up a small part of Taiwan’s foreign policy outreach. However, there were indications that USAID could have played an increased role in aligning and furthering Taipei and Washington’s foreign policy agendas. The Taiwan Allies Fund Act was introduced with bipartisan support last May. The bill sought to allocate $40 million over three years to countries that recognize Taiwan or have taken steps to strengthen informal ties with Taipei. With USAID’s abolishment, it is unlikely that this would come to fruition.
Taiwan must take proactive measures to safeguard its interests. In the short term, it may be necessary to fill the void left by USAID’s dismantlement and the United States’ aid suspension by continuing to implement and fund joint programs. Taiwan should also consider replacing USAID’s funding, especially in allies and close partner states. Central American allies, including Haiti and Guatemala, are recipients of significant U.S. aid. While Australia, Japan, and New Zealand are the largest foreign aid donors in the Pacific Islands, the United States still gave $1.1 billion between 2018-2022, on par with Chinese aid to the region. China has signaled to countries that lost USAID funding, including Nepal, Colombia, and the Cook Islands, that it would be willing to step up. It’s in Taiwan interests to provide alternative funding sources.
Given the uncertainty surrounding the Trump administration’s current policies, especially the legality of some of the executive orders, it is not easy to speculate what U.S. foreign assistance will look like going forward, including how long the suspension will last, which programs will be reinstated, and which department or agency may take over USAID’s responsibilities. Cost-cutting, however, has been central to Trump’s policies thus far. Therefore, in the longer term, Taiwanese policymakers should consider what its foreign aid strategy may look like without U.S. support. Potential alternatives include expanding or deepening collaboration with other partners. Japan emerges as an especially strong contender as Tokyo enjoys close ties with Taipei and is adept at using foreign aid to achieve its foreign policy goals.
Regardless of how policymakers in Taipei choose to maintain and reinforce its diplomatic and international space, Taiwan must be prepared to adapt to a world with less U.S. foreign assistance.