Trump and Musk froze USAID funding to put Americans first. US citizens are feeling the impact.

• President Trump froze USAID spending to put "American interests" first.
• The decision has left at least 12,700 Americans jobless, a number that is expected to grow.
• In North Carolina, home to some of the largest USAID contractors, hundreds have been furloughed.

They have chosen to delay discretionary spending for new furniture and subscription services. They worry about being able to afford groceries for their families. And they have been left to wonder if they will get paid for work already performed.

President Donald Trump's January 20 executive order placed a 90-day freeze on foreign aid in the name of putting "American interests" first. That order and other actions, which halted work on hundreds of projects funded by the US Agency for International Development, known as USAID, have had profound ripple effects on American lives.

Intended to reduce wasteful spending and limit the money the US sends overseas, the actions have impacted thousands of American workers whose jobs are funded by USAID. The funding freeze has been acutely felt in North Carolina, one of the top state recipients of USAID dollars, according to interviews with USAID contractors who have been furloughed or fired with little information about whether invoices for past work will be paid.

The decision has implications for US farmers, furniture makers, airline carriers, and hundreds of other US organizations that sell products or services to the government agency. In fact, USAID rules require a range of purchases — from food to vehicles to pharmaceuticals and plane tickets — to prioritize US vendors.

"Foreign aid, with a few exceptions for close allies such as Egypt, Israel, and Jordan, is not transferred into the treasuries of aid recipient governments," Andrew Natsios, a former administrator of USAID, said in February 13 testimony before Congress. "Instead, it is spent through international and local non-governmental organizations, US and local universities, for-profit development contractors, and civil society organizations."

Until now, USAID had maintained a staff of around 10,000, according to the Congressional Research Service, relying on contractors to do the bulk of its work.

The administration's decision to defund USAID — Elon Musk said this month that he "spent the weekend feeding USAID into the wood chipper" — has led to the layoff or termination of thousands of US employees at companies that contract with USAID, according to a USAID tracker set up by Molloy Consultants, a global health consulting group.

The White House and the State Department did not immediately respond to requests for comment about the impact on US workers. "We're not trying to be disruptive to people's personal lives," Secretary of State Marco Rubio said on February 7. "We're not being punitive here."

Pete Marocco, deputy administrator for USAID, said in a February 10 affidavit that the pause was necessary in order to enable "a thorough review of USAID's operations."

North Carolina takes a hit

The impact of the funding freeze was immediate in North Carolina, one of the top state recipients of USAID dollars. The state is home to organizations that received more than $2.2 billion from USAID, according to Molloy Consultants, placing it fifth among US states.

"I will be very blunt. The freeze has been devastating," Brianna Clarke-Schwelm, executive director of the North Carolina Global Health Alliance, told Business Insider. "Already we are seeing mass furloughs and mass layoffs. Hundreds of people have already lost their jobs."

The impact "will reach people in every corner of our state," she said.

North Carolina is Trump country; the president won the state in 2016, 2020, and 2024, and he visited it at least 11 times during last year's campaign, more than almost any other state.

Senators Thom Tillis and Ted Budd, both Republicans, didn't immediately respond to requests for comment for this story. Both senators have fielded calls and emails from constituents, often responding with impersonal emails, according to some recipients who spoke to BI.

"Your government has a responsibility to review every taxpayer dollar and ensure that it is spent wisely and in the best interest of the American people," one of Budd's emails read.

Representative Valerie Foushee, a Democrat whose district includes Durham, said she had heard from hundreds of constituents concerned about the funding freeze.

"I am deeply concerned regarding the illegal actions taken by the Trump Administration to dismantle our leading foreign aid agency," Foushee said by email. "Trump's detrimental Stop Work Order will have widespread repercussions across our state, affecting farmers, local businesses, researchers, medical professionals, biotech companies, and many others. In my district alone, thousands of workers across numerous international development organizations will be affected."

North Carolina's Raleigh-Durham metro area is home to two of the six largest global recipients of USAID funds between 2013 and 2022, according to a report from the Congressional Research Service. FHI 360, a Durham-based nonprofit focused on health, nutrition, and economic opportunity, received $3.79 billion during those years and RTI International, a research institution based in Research Triangle Park, took in $2.31 billion.

On February 6, FHI 360 said it would furlough 36% of its US staff, including 200 in North Carolina. Spokesperson Jennifer Garcia declined to elaborate on the announcement.

A week later, RTI disclosed temporary layoffs for 226 of its staff, including 61 in North Carolina. "RTI deeply values every staff member," CEO Tim Gabel said in a press release. "The projects our international development staff implement provide essential contributions that support America's leadership in creating a more prosperous, safe, secure and resilient world."

Two others among the top organizations receiving USAID funds, Chemonics and DAI, also employ workers in the state. Chemonics has furloughed 600 staff and placed another 300 on limited work hours, a spokesperson told CNN. DAI furloughed about 380 staff, 60 to 70% of their workforce, a spokesperson told the network.

As of Monday, at least 12,700 contractors who relied on USAID funding had been furloughed or put on leave, according to numbers compiled by Molloy Consultants from impacted organizations.

The global health industry is a significant driver of North Carolina's economy. The industry accounted for roughly 170,000 jobs in the state and added almost $32 billion in value to the state's economy, according to a 2022 report commissioned by NCGHA. That's about 4% of the state's GDP, according to data from the Bureau of Economic Analysis.

For those who have lost their jobs or been furloughed, the last few weeks have been traumatic. Many told BI they are applying for unemployment benefits. One person decided to cancel plans to buy a new North Carolina-made couch after being put on furlough.

"I don't think folks realize how big of an industry this is for America," said one person who asked not to be named to avoid professional repercussions. "Just in the Triangle you have two of the largest implementers in the world, and then countless NGOs impacted. Multiply that by 49 states. How many jobs are we talking about here?"

Last April, the US Department of Agriculture said it would spend $1 billion to buy US commodities for USAID to ship overseas. A USAID fact sheet says the agency partnered with at least 27 North Carolina farmers.

Small businesses have also been impacted. In December, a government official said the agency sent $1 billion to US small businesses in the last fiscal year.

Support for small firms has included State Department purchases of at least $7.5 million furniture over the last eight years from North Carolina manufacturers to fill embassies, missions, residences, and USAID facilities, according to data from usaspending.gov.

"If this continues, 90% of the NGO and contractor community will cease to exist within another month," Natsio said in his testimony last week. "NGOs, many of them faith-based, Christian organizations, will be forced to shut down programs, lay off staff (which many have already been forced to do), and ultimately close their doors."

The USAID spending freeze has also affected the state's universities, as the University of North Carolina system, North Carolina State University, North Carolina A&T State University, and Duke University had all received USAID funding.

In 2023, the University of North Carolina at Chapel Hill's Carolina Population Center received a $90 million grant from USAID to monitor global health. Between 2003 and 2015, the center's Measure Evaluation program received an additional $500 million from USAID to handle data collection.

UNC Chapel Hill has 10 stop work orders from USAID, including three in which the university is a direct recipient and another seven in which it is a subrecipient, spokesperson Cat Long said by email. The university had received $18.3 million in research awards this fiscal year and $17.5 million in the previous year.

"The University is awaiting more information from federal agencies to determine the long-term impact on these programs and their staff," she said. 

NC State "is working with various partners to gauge potential impacts of any changes to federally funded sponsored programs," university spokesperson Mick Kulikowski said by email.

Chemonics, DAI, and the Small Business Association for International Companies, a Raleigh-based trade association with more than 150 members, were among eight plaintiffs who filed suit on February 11 to challenge the administration's freeze. Two days later, a federal judge in Washington, DC, issued a temporary restraining order, giving the administration five days to restart funding.

Organizations representing USAID workers have also filed suit.

Meanwhile, uncertainty reigns.

A senior staff member at one of the major North Carolina organizations funded by USAID said organizations still don't know if invoices for work performed in November, December, and January will be paid. Another said that organizations are furloughing staff simply because they don't have any cash on hand to pay them.

Multiple furloughed employees of USAID contractors said that their projects are heavily audited, and they pushed back on the idea that there is widespread wasteful spending.