Following a near-total freeze on foreign assistance, the Trump Administration is moving fast to shut down USAID, with plans for the State Department to manage its few remaining assistance programs by July 1.
Ironically, this rash decision will frustrate one of the Trump Administration’s most ambitious foreign policy goals: reducing America’s reliance on China for critical minerals. Along with pausing major programs on health and humanitarian assistance, the Administration shuttered programs that my colleagues at USAID and I had specifically designed to move global mineral supply chains out of Chinese control.
These programs ended at a time when China had already begun leveraging its dominant role in several critical mineral supply chains against the United States. In response to the Biden Administration’s export restrictions on semiconductor technology, China restricted exports of alimony, graphite, germanium, and gallium. More recently, in response to the Trump Administration’s new tariffs, China added new export restrictions for seven rare earth elements, creating severe shortages for American manufacturers.
Mineral security is but one of the many bipartisan foreign policy goals set back in closing USAID. The Administration’s rushed review process failed to identify many programs that were already aligned with its interests — let alone those that could have been easily realigned. As the State Department considers how to use its foreign assistance budget, it should look first to what was lost.
Historically, the focus of USAID’s minerals work had been on promoting transparency and accountability in resource governance, which increases opportunities for citizen engagement and limits opportunities for corruption. For example, USAID has long supported the Extractive Industry Transparency Initiative to increase public disclosure on exploration, production, revenue distribution, and ownership. Other initiatives included formalizing illegal mining operations, improving traceability, and increasing enforcement of labor and environmental standards.
These efforts helped deliver economic development to mineral-rich countries, but they also leveled the playing field for American companies competing for foreign contracts. Whereas American companies would risk legal enforcement and public backlash for engaging in corruption or tolerating illegal or otherwise unsavory activity in their supply chains, Chinese companies operate abroad with significantly less scrutiny back home. It is therefore in the interest of American companies that rules and regulations abroad be consistent with those of the United States.
In recent years, USAID’s focus on breaking China’s stranglehold on critical mineral supply chains became more explicit. For example, during the last Administration, USAID expanded its programming in the Copperbelt region of the Democratic Republic of the Congo (DRC). Though the DRC is the world’s largest cobalt producer and the second largest copper producer, its mineral supply chains are tightly controlled by China: Chinese companies own the country’s largest mines, its local processing operations, and the railroad that takes its minerals to China for additional processing.
To counteract China, USAID supported the growth of a copper processing industry in the DRC and various projects along the Lobito Corridor: an infrastructure initiative connecting the Copperbelt to Angola’s Port of Lobito, increasing access to the U.S. market.
As part of that effort, I kicked off a new USAID activity in January of 2025 to help refurbish the railroad from the DRC’s Copperbelt to the Angolan border — a key segment of the Lobito Corridor. The activity would have provided the government of the DRC with a financial model and a stakeholder analysis, helping to accelerate the refurbishment, improve the project’s development outcomes, and mitigate the risk that stakeholders would block the project. And though the project would have also increased access to the DRC’s critical minerals for American manufacturers, the work came to an abrupt stop on January 20, 2025.
The Trump Administration’s foreign policy on critical minerals seems focused on negotiating rights to mineral reserves, from Ukraine to Greenland to the DRC. Presumably, once the U.S. obtains these rights, the U.S. Development Finance Corporation (DFC) would invest taxpayer dollars alongside private capital to mine, process, and transport critical minerals.
DFC, a U.S. government agency first authorized in 2018, is an important part of America’s foreign policy toolkit. Its various financial tools, including loans, equity investment, and political risk insurance, mobilize capital into strategically important projects that would not otherwise attract sufficient investment. In fact, a $553 million loan from DFC to the Lobito Atlantic Railway in 2024 served as the backbone for billions in investment into the Lobito Corridor.
However, DFC financing alone will not achieve the Administration’s desired outcome. There are two functions once held at USAID that are necessary complements to DFC’s investments: transaction support and policy reform.
Transaction Support: Since DFC has a modest overseas presence, USAID often served as its “boots on the ground.” This relationship was codified with a step-by-step manual on how USAID should support DFC transactions. In the sourcing phase, USAID staff’s combination of technical expertise and in-country connections allowed them to identify promising opportunities for DFC financing. And once DFC invested in a project, USAID engaged with stakeholders at all levels — including those in mining regions located far from capital cities — to make DFC’s investments successful.
To fill the gap in transaction support left by the dissolution of USAID, the State Department or DFC itself will have to significantly expand overseas staff with strong development expertise related to the mining industry and extensive in-country networks, likely drawing from former USAID staff.
Policy Reform: In addition to supporting DFC’s work on specific investments, USAID benefited all DFC transactions through programs that improved the policy environment for international investment. More competitive bidding processes allow DFC-backed companies to win contracts, while clear and consistent regulations reduce policy uncertainty throughout the lifetime of an investment.
Moreover, mining under a stronger policy environment has a much lower risk of further damaging America’s global reputation. If a local government fails to enforce environmental regulations or to properly manage its own revenue from the mining project, blame will inevitably fall to the mining company and its investors (such as the U.S. government through DFC). China’s reputation has already suffered this fate in many countries, and it is in the American interest to differentiate itself as the preferred partner.
As with transaction support, the U.S. government will need to build the capacity to help countries implement policy reforms that align with American foreign policy interests, particularly in the mining sector. That capacity existed at USAID, and it can be brought back.
The humanitarian consequences of USAID’s sudden demise have already garnered significant attention in the media. And, while many important programs have been cut, the Administration has decided to keep some of the most prominent life-saving programs.
But the public outcry over USAID has yet to emphasize how foreign assistance also promotes American economic strength, including by reducing our dependence on China for critical minerals. The integration of some USAID’s functions into the State Department presents an opportunity for advocates to refresh their message, perhaps triggering a more comprehensive review of past programs that could salvage some of the development expertise and networks lost with USAID.
