Court in U.S. allows Trump to reduce funds owed by USAID by billions
The U.S. Court of Appeals for the D.C. Circuit has ruled in favour of the Trump administration, allowing it to withhold up to approximately $2 billion in frozen USAID foreign aid payments. The decision, which was delivered in a 2-1 vote, represents a legal victory for Trump's efforts to dismantle and reduce foreign aid spending through USAID [1][2][4].
The ruling is based on legal standing and statutory interpretation. The court majority, led by Judge Karen L. Henderson, found that the plaintiffs—aid grantees and contractors—lacked the legal standing to sue the administration over withholding funds. This is because the dispute is fundamentally a statutory one governed by the Impoundment Control Act (ICA) [1][2][4].
The plaintiffs were unable to bring claims under the Constitutional or Administrative Procedure Act (APA) frameworks because APA review is precluded by the ICA concerning withholding appropriated funds. The court stated that only the Comptroller General has authorized standing to bring suits under the ICA, not the grantees themselves [1][2][4].
This ruling allows the administration to continue its pause and reduction of USAID-funded programs that Trump sought to dismantle immediately after his second term inauguration. The freeze on payments had triggered lawsuits by aid groups, which argued the halt was causing “immediate and irreparable harm.” However, the appeals court decision now clears the way for the administration to cut the aid without resuming payment [1][2][4].
Earlier in March 2025, the Supreme Court had denied the administration’s request to continue blocking aid payments, ruling narrowly 5-4 to allow disbursements while the case proceeded. That ruling was seen as a setback for the administration, but the appeals court decision reversed a lower court's order to pay the funds and vindicated the administration's position [3][4].
Foreign aid groups and recipients argue that the quick dismantling of aid risks significant economic and security risks. Scott Greytak, a director at the group U.S. Transparency International, stated that cutting a large amount of U.S. foreign aid could create new obstacles for U.S. businesses looking to open or expand into foreign markets [5].
This case exemplifies the legal and political battle over the Trump administration’s efforts to cut foreign aid, highlighting limits on judicial review of impoundment of appropriated funds and emphasizing the ICA’s procedural controls [1][2][3][4].
Breanne Deppisch, a national politics reporter for Digital, covers the Trump administration with a focus on the Justice Department, FBI, and other national news.
References: [1] The Washington Post, "Trump administration can withhold up to $2 billion in foreign aid payments, federal appeals court rules," August 13, 2025. [2] CNN, "Court allows Trump administration to withhold $2 billion in USAID foreign aid payments," August 13, 2025. [3] The New York Times, "Supreme Court allows Trump administration to freeze USAID payments," March 1, 2025. [4] Politico, "D.C. Circuit Court rules Trump can withhold $2 billion in foreign aid," August 13, 2025. [5] Reuters, "Trump's foreign aid cuts could hurt U.S. businesses, experts say," May 1, 2025.
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