Following his victory in the 2024 U.S. elections, Donald Trump re-entered the presidential office as a highly controversial figure. In the fields of foreign policy, Trump shifted the international development mechanism by dismantling existing foreign aid programs. This is demonstrated, among others, by cutting 90% of the budget for the United States Agency for International Development (USAID). Trump’s America First policy implies a protectionist economic policy that is directly correlated with the extreme reduction of foreign assistance, for the administration prioritizes American domestic economic interests.
USAID has assisted numerous countries across the globe in various humanitarian sectors: inequality, public health, climate adaptation, education, and disaster relief. Nevertheless, Trump’s administration discontinued the USAID scheme, as it was ‘unexplainable’ and must be closed down. Despite criticisms, the administration has managed to terminate all USAID employees.
Trump’s decision to withdraw USAID from global operations has caused distress in the Pacific region. This unprecedented movement led to havoc for underdeveloped countries in the South Pacific region. Not without reason, threats are likely occurring, as those countries are prone to disasters, have low economic development, are vulnerable to diseases, and, most importantly, are threatened by debt distress.
The Pacific region is highly dependent on foreign aid, or Official Development Assistance (ODA). This is proven by the ODA/GNI ratio, which indicates the PICS are the highest consumers of official development assistance per capita in the world (World Bank & Lowy Institute, 2024).
Between 2008 and 2022, the US provided the PICS with substantial funding of US$1.1 billion. The US’s portion for this region has been mainly given to COFA countries: the Marshall Islands, Palau, and the Federated States of Micronesia. As much as 80% goes to COFA countries, while the rest is given to Melanesian and Polynesian countries (Lowy Institute, 2023). The US also becomes the major donor of the development funding for the Pacific region through the World Bank, which is the largest multilateral funding agency assisting PICS.
Upon closer inspection, PICS has been striving to mitigate climate change issues. USAID provided multiple programs, such as the Pacific American Fund, USAID Climate Ready Project, Pacific-American Climate Fund (PACAM), and OurFish OurFuture, to address key issues in the region. These programs aim to foster development, improve livelihood, preserve biodiversity, mitigate climate change impacts, and improve productivity in the fisheries and agriculture sectors.
In the context of foreign aid, it is immediately apparent that foreign aid aims to end grievances. In the Pacific region, USAID is a major donor that addresses multi-sectoral problems. The budget cuts also threaten the climate change adaptation and mitigation efforts for PICS. The US provided $578.5 million for various actors in the region—governments, NGOs, and ordinary citizens—to support climate change policies (DT Global, 2024). The US-Pacific Partnership Strategy is also being terminated, despite having offered US$60 million for the fisheries sector and mobilized Peace Corps volunteers (Wood, 2025).
The budget cuts also have a profound impact on HIV/AIDS treatment. The cuts have deep impacts on the President’s Emergency Plan for AIDS Relief (PEPFAR). In one of the ABC Australia reports, Christine Stegling, the deputy director of the UN AIDS Treatment Center, said the cut leads to severe consequences since USAID is one of the leading institutions that carry out essential research and medication programs for HIV/AIDS patients, potentially leading to the deaths of 6 million people by 2029 (Batah & Kekatos, 2025). The US also became the primary donor for the Pacific Humanitarian Warehousing Program and fisheries results under the Partners in the Blue Pacific cooperation among like-minded countries (Price, 2025). Under Trump’s maneuver, these initiatives will be left undermined.
Geopolitically, USAID withdrawal will allow China, as a rising power, to strengthen its ties with the PICS. China can use its Belt and Road Initiative as an instrument to assist these countries. As of 2024, China became the second-largest donor to PICS, providing US$1.6 billion. Seemingly noble, China has a precedent for giving PICS mega projects. However, this often results in large unpayable debt. This type of aid is often called debt-trap diplomacy because it leads to unpayable debts and causes structural problems.
Additionally, the large amounts of Chinese foreign aid are intended to support the One China Policy. This is showcased by the Solomon Islands, which, with China as a key actor in this shift, overturned its strategic support from Taiwan to adhere to the One China Policy.
The Cook Islands are also showing similar tendencies as China’s existence grows and undermines its main donor, New Zealand. The Cook Islands signed the Action Plan for the Comprehensive Strategic Partnership (CSP) 2025-2030, as well as an agreement for seabed minerals (approximately 6.7 metric tons of rich minerals).
Chinese foreign aid through the Belt and Road Initiative (BRI) assists multiple countries across the region. There have been mega-scale projects such as the $135 million renovation and construction of the Vanua Levu Road in Fiji, the $120 million Malekula National Road in Vanuatu, and the $66 million Huawei signal capture tower in the Solomon Islands.
PICS is also on the brink of external debt complications. For one, Tonga becomes one of the PICS to face the highest risks for debt distress, as 80% of its external debt must be paid to China in 2028 (Duke, 2023). Furthermore, Vanuatu’s debt reaches as much as 40 percent of its GDP, and one-third of the debt is sourced from China (Wilson, 2023). Samoa also becomes the third-highest debtor to China, since it has built a large port project, the Matautu-tai Port, leading to severe consequences of debt distress.
One question then arose: what if these countries cannot repay the accumulated debt to China? The country’s inability to repay the debts may lead to the creditor’s sovereignty being compromised. Two countries exemplify this fact: Sri Lanka and Pakistan.As Sri Lanka cannot pay $1.3bn in debts, Hambantota port was acquired by China through a 99-year lease. This also goes to Pakistan due to Islamabad’s low capability to pay the debt. Thus, Gwadar Port becomes subject to China’s control. Under the China-Pakistan Economic Corridor, China intends to maintain its regional economic and political interests in the South Asia region.
The impact of foreign aid is heavily dependent on the donor’s actions. While it is true that the US’s presence in the region is minimal, it is also the case that without the US, Pacific countries will be losing a key partner in strategic sectors. Moreover, the US has created an alliance with other donor countries such as Australia, Japan, and New Zealand to foster development and improve livelihoods in the region.
Liberal values can ardently contend with the nature of the Chinese foreign debt and its geopolitical motives. The US and other like-minded countries can offer sustainable, accountable, and transparent aid programs. Through the grievances-redress mechanism (GRM), the US and its allies can become reliable and trusted donors. Their programs are characterized by transparency and accountability, ensuring pure programs without any potential trappings.
