Economy

Donald Trump’s administration has slashed US international aid commitments, removing a big source of assistance in sectors from economic development to health. The planned shrinking of the US Agency for International Development (USAID) is the headline move in a wave of overlapping actions that global institutions and recipient countries are scrambling to address. Washington has announced its exit from the World Health Organization, while the fate of its big contributions to other global development and health institutions across the world is in the balance.How do US contributions compare to other aid providers? US foreign assistance obligations amounted to $68bn across 204 countries and territories for 2023, according to official figures. Almost two-thirds of the total was managed by USAID, with most of the rest overseen by the state department. Much of it is spent by agencies themselves, US contractors and local partners, rather than given to foreign governments. The biggest share of total spending — just under a third — was devoted to economic development, roughly a fifth to humanitarian aid, while peace and security and health each received around $10bn.Some content could not load. Check your internet connection or browser settings.The US is the biggest international donor by some distance. The $63.5bn it gave in 2023 compared with $34.7bn from EU institutions, according to OECD data. Germany was the next largest nation state donor with $32.2bn, ahead of Japan on $19.3bn and the UK on $17.3bn.Other big international institutions make significant contributions, mainly in the fields of economic development and health. The World Bank weighed in with $16.3bn and the charitable Gates Foundation with $4.9bn. While the volume of US funding is large, it is not a particularly generous donor in per capita terms. Norway led the way among countries with assistance worth 1.09 per cent of its gross national income in 2023, followed by Sweden with 0.91 per cent and Germany with 0.79 per cent. The US was at 0.24 per cent — well under half the proportion given by Turkey. Some content could not load. Check your internet connection or browser settings.What cuts has the US made? US aid is relatively diversified, reflecting the fact that its uses vary from military assistance to poverty relief. In 2023, more than a quarter of its aid obligations were to Europe and Eurasia and a little less than a quarter to sub-Saharan Africa. The biggest international aid recipients as a share of national income are in Africa. The proportion rises to almost a quarter in Central African Republic and a third in Somalia, according to the OECD figures. The biggest change since Trump returned to the White House has been the gutting of USAID’s activities. On February 3, Elon Musk, head of Trump’s so-called Department of Government Efficiency declared: “We spent the weekend feeding USAID into the wood chipper”. Last week a judge temporarily blocked the Trump administration from placing 2,200 USAID employees on leave, reducing the agency’s staff to just a few hundred.Some content could not load. Check your internet connection or browser settings.The moves in Washington are already having knock-on effects in the aid world. One example is the Pepfar initiative, which has invested more than $110bn in the international effort to combat HIV/Aids since President George W Bush launched it in 2003. It is often cited as one of the big public health success stories of this century. While the US has issued a humanitarian waiver allowing treatment to continue for most Pepfar recipients, health workers on the ground describe significant disruption. This is because drug purchase is just a small part of the logistics required to deliver such a programme across so many communities. What other effects might the cuts have? Ukraine has been the largest single recipient of USAID funding in each of the years since Russia launched its full invasion in 2022. US strategic allies such as Jordan also receive USAID financing. Global health has been perhaps the most immediately and acutely affected area, highlighting the effects that cuts to one organisation can have on the work of others. The changes have already slowed disease eradication and containment efforts across Africa, according to people familiar with the situation on the ground. Amanda McClelland, senior vice president of Prevent Epidemics at Resolve to Save Lives, a global health organisation, said the Centers for Disease Control and Prevention normally provided “a lot of the technical support, a lot of the staffing and a lot of the key pieces that keep the engine moving, in particular disease tracking”. Gaps were emerging “as things don’t work as they normally would, and as staff pull out”.Current outbreaks across the continent include Ebola, Marburg fever, bird flu and mpox. “These are all high impact outbreaks . . . and it doesn’t take much for them to get out of control and end up costing billions of dollars and thousands of lives,” McClelland said. “The disease tracking systems are dark, and the US is less safe by not knowing what is going on out on the ground.” Ashish Jha, dean of the Brown University School of Public Health and a former US coronavirus response co-ordinator, warned: “We’re just substantially increasing the likelihood that we are going to start seeing outbreaks of haemorrhagic viral fevers like Ebola spread beyond the original country into Europe, into the US.”“I think that risk has just gone up very, very dramatically,” he added.What is the case for curbing international aid?There is a long-standing debate over the desirability and effectiveness of aid flows. Critics charge that they can build unhealthy patterns in which poorer countries develop dependencies on and obligations to richer ones.Some content could not load. Check your internet connection or browser settings.Aid organisations themselves have evolved in response. Some now lay more emphasis on how their work can boost economic development and trade. Others have explicit exit mechanisms for when countries become wealthier: 19 nations no longer receive support from Gavi, the international vaccine alliance, because they have hit certain national income milestones. Opponents of the Trump administration’s approach say it goes far beyond a reasoned aid-sceptical case to wind-down of existing commitments. Rather than managed it has been sudden, disruptive to people’s lives — and is likely to have consequences that have not been fully anticipated. Can others fill the gap?A big question is how the US will engage with leading development organisations, particularly in health. US withdrawal would leave a large hole in some global institutions at an already difficult time. It would amplify difficulties caused by potential shortfalls from other donors. Many are more reluctant to provide finance when struggling with other demands, from conflict to climate change.Two big tests are looming. Gavi is partway to its goal of a minimum of $9bn for its next five-year funding cycle starting next year. The Global Fund to Fight AIDS, Tuberculosis and Malaria is due to launch its three-year replenishment round this year; last time, the US committed to providing up to one-third of total donor contributions.China has been touted as a possible candidate to fill the gap in multilateral aid, but it is not clear this fits with its policy goals. Beijing has historically invested heavily in bilateral relationships that are often infrastructure focused, with a significant loan element. Announcements are continuing to flow from Washington, leaving financial recipients and other donors struggling to gauge their impact. The one certainty is that the international aid world is facing its biggest disruption for decades. More

Beijing is tightening its grip on cutting-edge Chinese technology, aiming to keep critical knowhow within its borders as trade tensions with the US and Europe escalate.Chinese authorities in recent months have made it more difficult for some engineers and equipment to leave the country, proposed new export controls to retain key battery technologies, and moved to restrict technologies for processing critical minerals, according to multiple industry figures and ministry notices. The country’s safeguarding of leading technologies comes amid added tariffs from US President Donald Trump and a trade row with Europe over cars, which threaten to spur more local and foreign groups to move production elsewhere.Among the companies to be hit is Apple’s main manufacturing partner Foxconn, which has been leading the Silicon Valley group’s supply chain diversification into India. People familiar with the matter said Chinese officials had made it difficult for the Taiwanese-owned contract manufacturer to send machinery and technical Chinese managers to India, where Apple is keen to build up its supply chain. A manager at another Taiwanese electronics company said that they, too, were facing challenges sending some equipment out of China to plants in India, though he noted shipments to south-east Asia remained normal. An Indian official alleged China was using customs delays to impede the flow of components and equipment heading south. “Electronic industry supply players have been told not to establish manufacturing and assembly operations in India,” the official said, asking not to be named. Media site Rest of World earlier reported on some of Foxconn’s issues. A Foxconn assembly line India. Apple is keen to build up its supply chain in the country More

The outcome was a setback for workers trying to score a second election success at an Amazon facility. The union vowed to keep trying to organize.Amazon workers voted overwhelmingly against a bid to unionize their North Carolina warehouse, the National Labor Relations Board said on Saturday, the latest setback in labor organizing efforts at the e-commerce giant.Workers at the RDU1 fulfillment center in Garner, outside of Raleigh, voted 2,447 to 829 against unionizing with Carolina Amazonians United for Solidarity and Empowerment, or CAUSE, an upstart union founded by warehouse workers in 2022.Organizers at the warehouse, which employs more than 4,000 people, sought starting wages of $30 an hour. The current pay range is about $18 to $24, Amazon said. The union also demanded longer lunch breaks and increased vacation time. In a statement, leaders of CAUSE said the election outcome was the result of Amazon’s “relentless and illegal efforts to intimidate us.” They did not say whether they would challenge the outcome, but vowed to keep trying to organize. Eileen Hards, a spokeswoman for Amazon, wrote: “We’re glad that our team in Garner was able to have their voices heard, and that they chose to keep a direct relationship with Amazon.” Leading up to the election, the worker-led union filed charges with the labor relations board accusing Amazon of interfering with employees’ protected union activity. The company gave preferential treatment to workers who did not support the union, according to the charges filed by CAUSE. Amazon also unfairly fired the co-founder of the union one week before workers filed for a union election in December, CAUSE said in a filing.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Jobless filings in Washington, D.C., surged to 1,780 for the week ending Feb. 8, a 36% increase from the prior week.
Since President Donald Trump has taken office, nearly 4,000 workers in the city have filed for unemployment insurance.
The spike comes as Trump and the Elon Musk-led Department of Government Efficiency advisory board have ordered layoffs across the federal government.

Elon Musk listens to U.S. President Donald Trump speak in the Oval Office of the White House in Washington, D.C., U.S., Feb. 11, 2025. 
Kevin Lamarque | Reuters

President Donald Trump’s moves to fire thousands of federal government workers have coincided with a surge in jobless claims in Washington, D.C., that could get worse as the efforts intensify.
Since Trump has taken office, nearly 4,000 workers in the city have filed for unemployment insurance as part of a surge that began at the start of the new year, according to Labor Department figures not adjusted for seasonal factors.

In all, just shy of 7,000 claims have been filed in the six weeks of the new year, or about 55% more than in the prior six-week period. Filings rose to 1,780 for the week ending Feb. 8, a 36% increase from the prior week and more than four times around the same period in 2024.

By contrast, the total level of claims in the U.S. has been moving little, with the four-week moving average of initial claims at 216,000, little changed from the beginning of the year and actually trending lower for the most part over the past several months.
The jump in D.C. claims comes as Trump and the Elon Musk-led Department of Government Efficiency advisory board have ordered layoffs across the government structure and instituted buyout programs for early retirement.
“I expect it to go higher, and definitely we’ll be watching it very closely,” said Raj Namboothiry, senior vice president at Manpower North America, the workforce solutions company.
While it’s unclear what share of the spike is directly related to federal government workers, the rise coincides with the White House ordering the layoffs of probationary employees along with thousands of others as the administration seeks a broad-based reduction in the labor force. In addition, some 75,000 employees have accepted the buyout offer.

Washington, D.C., had one of the highest unemployment rates in the country at 5.5% as of December 2024, surpassed only by Nevada, according to the Bureau of Labor Statistics. However, the metropolitan area including the Arlington and Alexandria, Va., area was at just 2.7%. The national unemployment rate for the month was 4.1%, before slipping to 4% in January.

Broader labor picture still solid

Namboothiry said the reduction of the federal workforce could present some problems in the region, though it would do little to dent a national picture that he called “fairly stable.”
“Yes, the numbers are definitely sizable,” he said. “But because you’re spread across multiple [geographies], multiple skill sets, multiple sectors, I don’t see that playing a significant role in impacting the overall market.”
There are about 2.4 million federal workers, excluding post office employees, with nearly one-fifth employed in the D.C. area and the others spread around the country. Outside of spikes around tax season, the number has held relatively constant since the late 1960s.
Still, Trump has targeted the federal employment rolls as a major part of his effort to shrink the size of government.
Displaced employees may not be out of work long, however. Namboothiry thinks their skill sets could be in high demand for certain sectors of the economy.
“This presents an opportunity, because there are clients who are looking for talent that’s exiting that may benefit,” he said. “There’s going to be some conversations around an interest from employers with this pool of talent.”
The cuts that Trump are targeting are spread around the government, with some agencies expecting dramatic cutbacks.
How those displaced employees fare will depend on their fields of work, said Allison Shrivastava, economist at the Indeed Hiring Lab.
“It might be that very few of them remain without work,” she said. “It definitely depends on sector. So, for example, if you are, As Trump ramps up layoffs, unemployment claims start to spike in Washington, D.C. You’re in the accounting sector right now, that’s a sector that, in terms of job postings, we’ve seen perform pretty well. Say you’re in software development … those jobs have not been as in demand. The level of difficulty that you would have in finding a job would really be contingent on the sector that you’re in.” More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Britain’s security services are taking part in a review into China’s growing role in the UK’s energy system amid concerns over Beijing’s influence in strategic national infrastructure.MI5 is helping establish the extent to which the use of Chinese technology such as solar panels or industrial batteries could pose potential future security threats, according to people close to the situation.Concern over Chinese companies’ dominance of international supply chains for technologies crucial to decarbonisation is growing as the UK tries to shift away from fossil fuels.That has sparked concern in Whitehall about the potential for sensitive data to be shared with the Chinese government as well as the country’s potential control over strategic energy assets.The review into China’s growing role in the energy system is part of the government’s broader “audit” of UK-China relations that will report later this year.“The spooks are looking at it,” said one official. “It’s tied to the industrial strategy, looking at general questions of where we get our things from, and the security risk.”MI5 director-general Ken McCallum said in October that the “National Protective Security Authority” — a branch of the domestic security service responsible for monitoring technical threats — has had a long-running “focus” on supply chain security.Ken McCallum, MI5 director-general, says a branch of the domestic security service responsible for monitoring technical threats has had a long-running ‘focus’ on supply chain security More

The lack of clarity about tariffs and other policies could hurt hiring and investing. But the strong U.S. economy should provide a buffer.It is an axiom heard countless times in business school lecture halls and on corporate earnings calls: Uncertainty is bad for business.The U.S. economy is about to test that proposition like never before.The first weeks of the second Trump administration have been a dizzying whirlwind of economic policy moves: A spending freeze was declared, then rescinded. Federal programs, and even entire agencies, have been suspended or shut down. Tariffs have been threatened, announced, canceled, delayed or enacted — sometimes in a matter of days or even hours. Measures of economic policy uncertainty have soared to levels normally associated with recessions and global crises.Business leaders — many of whom cheered President Trump’s election victory, expecting lower taxes and reduced regulation — have been left shaking their heads.“Your guess is as good as mine what’s happening in Washington,” said Nicholas Pinchuk, chief executive of the automotive toolmaker Snap-on.“So far what we’re seeing is a lot of costs and a lot of chaos,” Jim Farley, the chief executive of Ford Motor, told investors at a conference in New York this week.“It’s like your head is spinning with what’s coming down — you just never know,” said Chad Coulter, founder and chief executive of Biscuit Belly, a chain of breakfast restaurants based in Louisville, Ky.

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Economic policy uncertainty index
Note: Daily data, shown as biweekly average.Source: Federal Reserve Bank of St. LouisBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

The president says the VAT system used across Europe gives other countries unfair trade advantages. Here’s how the system started.President Trump on Thursday ordered his advisers to determine new tariff rates on America’s trading partners, a move that he said would “correct longstanding imbalances in international trade.”As part of his plan, Mr. Trump has taken aim at the value-added tax, a system used widely in Europe and elsewhere to tax the consumption of goods and services. The president and his team describe the tax as giving other countries an unfair trade advantage over the United States.Here’s what to know.What is a value-added tax?It’s a consumption tax that adds tax on a good or service at each stage of production. The final VAT is the sum of the tax paid at each stage. This system is unlike a sales tax in the United States, which is imposed by states on the final sale of the good.In Europe, VAT rates vary by country, but on average are about 20 percent — far higher than state sales taxes in the United States, which averaged 6.6 percent in 2023, according to the Tax Foundation.Value-added taxes are assessed at each stage of production for a good or service. The cost is borne by the final consumer, not by the business. If the goods are exported, much of the value-added taxes are given back to the exporter. That provides an incentive for businesses to export goods instead of selling in their home market.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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