Month: February 2025

The Trump administration’s decision to shut down the U.S. Agency for International Development (USAID) isn’t just an attack on foreign aid—it’s an own goal that hurts American businesses, weakens U.S. influence abroad, and hands a strategic advantage to rivals like China and Russia.

For decades, USAID has quietly helped American businesses expand into emerging markets, funding everything from renewable energy projects to climate-resilient infrastructure and agriculture innovation. Now, that funding is gone, and U.S. firms that relied on it will have to compete against state-backed Chinese and Russian companies that are eager to fill the void.

But the damage doesn’t stop there. The global supply chain, regulatory landscape, and geopolitical risk profile for American companies is about to get a lot more complicated.

Here’s what’s at stake—and what corporate boards should do about it.

What Happens to the Climate Work?

Short answer: nothing good.

USAID has been a major player in the global push for clean energy and climate adaptation, particularly in developing countries that lack the resources to transition away from fossil fuels. American companies have benefited, too—providing solar panels, wind turbines, climate data analytics, and infrastructure solutions to USAID-funded projects. USAID had two initiatives that drive outcomes here — annual budget allocations to climate adaptation, clean energy and sustainable landscapes ($579M allocated in 2023) and the Climate Finance for Development Accelerator ($250M). Between 2022 an 2030, the objective was to mobilize $150B from both public and private sector players – a planned 30:1 ROI on the money USAID spends.

With the agency shut down, that pipeline of projects vanishes. This means less demand for U.S. solar, wind, and battery storage technology, pushing countries toward Chinese alternatives. It also means less demand for engineering services from American companies who are engaged in these large scale projects.

In addition, it means:

• More deforestation as conservation efforts collapse, increasing carbon emissions and worsening climate change.
• Greater vulnerability to extreme weather events, leading to humanitarian crises that strain global supply chains.

Companies that have built sustainability commitments into their business models will feel the hit—not just from lost contracts, but from increased environmental risks that drive up operational costs.

American Businesses Are About to Feel the Pain

USAID’s shutdown is now a business problem—especially for industries that have depended on USAID projects for growth.

Who’s at Risk?

Renewable Energy Companies (e.g., First Solar, NextEra, Tesla)

• USAID has been a huge funder of clean energy transitions in emerging markets. With that funding gone, demand for      American solar, wind, and battery technology could shrink, leaving China to dominate.

Engineering & Infrastructure Firms (e.g., Bechtel, AECOM, Fluor)

• USAID-backed projects fund everything from climate-resilient roads to flood defenses. Without them, U.S. engineering and construction firms lose out on lucrative contracts abroad.

Agriculture & AgTech Companies (e.g., Corteva, John Deere)

• Many developing countries rely on USAID-funded initiatives for climate-smart farming, irrigation, and soil restoration. The shutdown puts those efforts at risk, reducing demand for U.S. agricultural technology and equipment.
• American agriculture is also a major beneficiary of USAID funding. Hundreds of thousands of tons of US Government Food Aid is now stuck in port and risks going to waste. Annually, America purchases $2B in basic commodities like wheat, rice, soy and corn from American farmers for distribution as food aid. American agriculture is also at risk.

Technology & Telecommunications (e.g., Microsoft, Cisco, IBM)

• USAID has supported digital infrastructure, cybersecurity, and data analytics for environmental and humanitarian programs. Now, developing nations may turn to Chinese and Russian tech providers instead.

Consulting & Professional Services (e.g., McKinsey, Deloitte)

• USAID has been a major client for firms providing policy advice, impact assessments, and project management. Losing those      contracts will hurt U.S.-based international development consultancies.

Defense & Security Contractors

• USAID has funded stabilization efforts in fragile regions, reducing the need for military intervention. Without those programs,      instability rises, and American companies operating abroad face higher security risks.

China and Russia: The Real Winners Here

With the U.S. retreating from development aid, China and Russia are more than happy to fill the gap.

• China’s Belt and Road Initiative (BRI), already a dominant force in global infrastructure investment, will expand into areas   once supported by USAID, locking nations into Chinese-built roads, power plants, and data networks.
• Russia benefits from prolonged fossil fuel dependence, as many USAID projects focused on transitioning developing countries   away from coal, oil, and gas. Without that funding, demand for Russian energy exports remains high.
• Both countries use foreign investment as a political tool, pushing nations away from democratic governance models and toward   authoritarian-friendly policies.

For U.S. companies, this means increased competition, tougher trade conditions, and a shifting regulatory landscape in many of the world’s fastest-growing markets.

What Should Boards Be Doing Right Now?

Corporate boards cannot afford to ignore this shift. Here’s how they should respond:

1. Assess Exposure to USAID-Backed Markets

• Identify which parts of the business relied on USAID funding—either directly through contracts or indirectly through supply chains.
• Determine if competitors (especially from China) are poised to replace lost revenue streams.

2. Monitor Geopolitical & Regulatory Risks

• Watch for new sanctions, trade restrictions, or regulatory changes as China and Russia expand their influence in emerging markets.
• Engage government affairs teams to track potential alternative funding mechanisms.

3. Strengthen Global Business Resilience

• Diversify international partnerships beyond government-funded projects, exploring private-sector partnerships and impact investors.

• Reevaluate supply chain vulnerabilities, particularly in climate-sensitive regions.

4. Double Down on ESG & Sustainability Strategy  

• If USAID-backed sustainability initiatives disappear, companies may need to step in with their own funding. There are two kinds of risks that will need to be evaluated – supply chain risk and reputational risk.

• Consider investing in climate adaptation measures independently to mitigate long-term business risks.

5. Prepare for Increased Competition from China and Russia   – Expect Chinese and Russian firms to aggressively pursue markets where USAID once operated.

• If expansion into certain regions becomes riskier due to geopolitical shifts, companies should consider alternative growth strategies.

Final Thought: USAID’s Shutdown Is a Global Business Risk

The closure of USAID isn’t just about humanitarian aid—it’s about economic influence, market access, and business risk.

For American companies that operate internationally, the disappearance of USAID funding means more uncertainty, more competition, and fewer opportunities in emerging markets. Boards that fail to recognize this shift will find themselves caught off guard as China and Russia consolidate their economic and political dominance in regions that once looked to the U.S. for support.

If the U.S. wants to remain a global leader—not just on climate, but in business and diplomacy—corporate leaders should be asking “How do we adapt?” Because right now, standing still isn’t an option.