Is the United States stepping back from foreign aid? Many are asking this question as projects are shut down, budgets shrink, and priorities shift. The concern is understandable. But I strongly believe that the United States will always have a foreign aid program. It may change in name, structure, or purpose, but it will not disappear. Aid from government institutions is not charity; it is a tool of policy, a lever of influence. Whether it flows through USAID, a new agency, or some future bureaucratic reshuffle, it will continue to serve the same function—advancing American interests and shaping global stability.
What is changing, however, is how the U.S. delivers aid. The global landscape is increasingly driven by economic power, and trade is emerging as a central pillar of U.S. foreign assistance. Not because it is a perfect model, but because it is practical, strategic, and aligned with national interests. It is also seen as a more sustainable approach—or at least, that is the sentiment echoed in informal conversations with diplomats from both the West and the Global South.
Traditional aid—grants, development projects, and financial transfers—has defined U.S. foreign assistance for decades. The results are mixed. While it has saved lives, funded development, and inspired change, it has also raised questions. Has it truly built long-term economic independence? Has it been optimized? Trade, by contrast, is being framed as the next step. It does not just relieve poverty—it builds wealth. It does not just deliver aid—it fosters economic power—or at least, that is the expectation.
What I foresee is that the United States is moving toward a model where foreign aid is an economic partnership. Success will not be measured by the dollars spent, but by the markets opened, the industries strengthened, and the nations made self-sufficient. That is why Aid for Trade will be a key pillar of U.S. foreign aid moving forward.
What does aid for trade mean?
At its core, Aid for Trade is the idea that foreign aid should focus on helping countries build their economies rather than relying on direct financial assistance. Instead of primarily funding humanitarian relief, governance programs, or development projects, the U.S. would prioritize economic partnerships, trade access, and investments in infrastructure and industry.
In practical terms, this means helping countries sell rather than just receive. It means reducing trade barriers, opening markets, and investing in roads, ports, and energy grids—the kinds of infrastructure that enable businesses to thrive. It means supporting industrialization and agricultural modernization, ensuring that countries are not just exporting raw materials but producing value-added goods that can compete in global markets. It also means investing in technology and skills transfer, equipping local workforces with the knowledge and tools to integrate into the global economy.
Why the shift toward aid for trade?
This is not a new concept, but it is gaining momentum as a dominant approach in foreign aid as the underlying assumption behind Aid for Trade is that economic stability leads to political stability. When countries have strong economies, they are less dependent on foreign assistance, less prone to conflict, and more aligned with U.S. strategic interests.
One clear driver of this change is China’s Belt and Road Initiative (BRI), which has demonstrated how trade, infrastructure, and investment can be wielded as geopolitical weapons. Beijing’s model ties economic engagement directly to political influence, creating a global network of trade-dependent allies. The U.S., which has long relied on foreign aid to maintain influence, is finding that direct assistance is no longer enough to compete. Economic power now determines alliances, and Washington will adjust its foreign aid strategy accordingly. ‘
The shift toward trade-based aid is also shaped by domestic political realities. The Trump administration made trade and tariffs central to its foreign policy, calling tariffs his “favorite word.” While his approach was more confrontational—using tariffs as leverage in negotiations—the underlying premise remains: trade is power. Even under subsequent administrations, the trend has continued. Policymakers from both parties are moving away from the old model of aid handouts and toward one that ties economic assistance to market-driven outcomes. Republicans see it as a way to reduce dependency and cut spending, while Democrats frame it as a more sustainable approach to development.
The U.S. is not abandoning foreign aid—it is redefining it as a direct extension of its foreign policy. This shift means that future aid will be more targeted, more conditional, and more strategic that align with American interests.
What about the EU and Nordic donors?
The European Union’s foreign aid system is among the most comprehensive and well-funded globally. As the largest provider of official development assistance (ODA), the EU and its member states—including the Nordic donors—have played a crucial role in humanitarian response, governance, and development.
Nordic countries, particularly Denmark, Sweden, Norway, and Finland, have long been recognized for their high aid contributions, progressive policies, and commitment to human rights, climate resilience, and sustainable development. However, as global aid priorities shift, economic pragmatism and geopolitical competition will likely push the EU and Nordic donors toward a trade-driven model—not if, but when.
Many European and Nordic donors already allocate funding to trade-related development initiatives, particularly in climate-friendly infrastructure, sustainable agriculture, and private sector-driven economic empowerment. From a policy-making perspective, a shift toward Aid for Trade would be viewed as a natural progression rather than a fundamental departure. Given the increasing focus on economic sustainability and geopolitical influence, such a transition would align with existing foreign aid strategies while reinforcing long-term financial viability and strategic positioning in recipient countries.
Which sectors will be prioritized, and what does it mean for INGOs?
Aid for Trade will focus on sectors that drive economic growth, secure supply chains, and reduce reliance on foreign assistance. Manufacturing will be prioritized to shift countries away from raw material exports toward value-added production, strengthening industrial capacity. Agriculture and agribusiness will receive investment to boost food security, increase exports, and integrate small-scale farmers into global markets. Energy infrastructure, particularly renewable energy, will be critical as both a development tool and a geopolitical strategy to reduce dependency on unstable suppliers.
Technology and digital infrastructure will also be key, ensuring that developing economies can compete in an increasingly digital world. For INGOs, this shift means a reduced role in direct service delivery and an increased need to adapt to economic-driven aid models. INGOs will be expected to work more with private sector actors, support skills training, facilitate access to markets, and align programs with investment-driven development goals. Traditional humanitarian and development programming will not disappear, but funding will increasingly favor initiatives that build economic self-sufficiency rather than long-term aid dependency.
However, this shift carries risks. Trade-based aid requires a stable regulatory environment, transparent governance, and functional infrastructure—conditions that many fragile economies lack. Without these prerequisites, Aid for Trade may widen the economic divide, leaving weaker nations unable to meet trade-based conditions. Additionally, trade-driven aid models depend on global supply chain stability, making them highly vulnerable to economic shocks, trade wars, and shifting geopolitical alliances. If economic downturns occur, aid recipients could find themselves trapped in trade dependencies without fallback mechanisms.
Finally, as donor countries push for trade-based partnerships, there is a risk that trade agreements will prioritize investor-friendly conditions over local economic development, reinforcing existing power imbalances in the global trade system.
What lies ahead for foreign aid
This is not speculation—it is a glimpse into what is already unfolding. The world is changing, and economic power, not traditional aid, is shaping alliances. The U.S. is not abandoning foreign aid but shape it as a tool of trade, influence, and strategic partnerships.
For developing nations, this means aid will come with expectations—markets must open, industries must grow, and economies must integrate into global trade. For INGOs, it means a shrinking role in direct aid distribution and a growing need to adapt—to work alongside businesses, support economic initiatives, and prove relevance in a world where aid is measured in investments, not handouts.
The age of foreign aid as a moral obligation is fading. In its place comes a new model—one where assistance is not given but exchanged, where trade agreements replace grants, and where economic strength decides the balance of power. Whether this is progress or a shift toward economic self-interest dressed as development is a debate for the years ahead.
*Ali Al Mokdad is an experienced leader with a background in managing operations in complex environments, including conflict zones and remote areas. He has worked with INGOs, UN agencies, the Red Cross and Red Crescent, and donor institutions. His experience spans the Middle East, Africa, and Asia, including countries like Syria, Iraq, and Afghanistan, leading teams in over 40 countries. Ali also advises on the boards of various NGOs and companies, focusing on diversity, inclusive leadership, and integrating technology to improve NGO operations and humanitarian work.
