Did USAID Aid the US?: The Impact of USAID Cuts on US Soft Power in Latin America

In January 2025, President Donald Trump cut nearly the entire budget of the United States Agency for International Development (USAID), representing a pivot from decades of US soft power strategy. I argue that the previous literature on soft power and foreign aid has become overly dependent on public opinion polling and fails to consider key steps in the process through which changes in soft power resources become policy, namely the role of political elites. I provide a systematic quantitative analysis of the USAID cuts, focusing on Latin America and the Caribbean. I utilize a continuous difference-in-difference design and the Global Database of Events, Language, and Tone (GDELT) database’s newspaper tone measure to show a causal relationship between the USAID cuts and elite opinion. I confirm previous findings of a positive relationship between foreign aid and opinion, finding that for every additional standard deviation of aid cut, newspaper sentiment when describing the US decreases by 0.3 standard deviations. For countries with a lower baseline opinion of the US, the relationship direction was reversed—newspaper sentiment increased as more aid was cut. Type of aid and democracy level of the recipient country moderate the magnitude of effect size. My thesis increases the robustness of earlier findings while providing evidence that aid cuts are felt more strongly than aid increases. These findings support concern that the 2025 USAID cuts will weaken US soft power abroad.