Which agencies will Trump eliminate?
I would price a meaningful but not dominant chance that USAID is eliminated during Trump’s term, with the most likely outcome being a legal or administrative hollowing-out rather than a clean statutory elimination. My independent estimate is modestly above the current market price because the political intent appears strong, but the institutional barriers are substantial.
Analysis
The case for Yes is that USAID has long been a visible target for conservative critics, and an administration intent on shrinking foreign-aid bureaucracy could take aggressive steps to dismantle, merge, or defund it. If Trump returns with a compliant Congress and strong executive focus, there is a plausible path to eliminate the agency in practice, especially if the definition used by the market rewards formal abolition, major reorganization, or permanent cessation of operations.
The case against Yes is stronger on the legal and procedural side. USAID is a statutory agency embedded in a broader foreign policy and appropriations framework, so outright elimination usually requires congressional action or at least sustained control over the legislative process; that makes a clean kill harder than rhetoric suggests. Even hostile administrations often find it easier to reduce staffing, redirect functions, or freeze programs than to abolish an agency outright, especially one tied to international commitments and bipartisan constituencies.
Compared with the current market price, the 31 percent Yes probability looks somewhat low but not wildly off. The market appears to be assigning substantial weight to Trump’s anti-bureaucracy posture and the possibility of rapid executive action, yet may be underestimating how often agency-elimination bets fail because formal abolition is much harder than operational weakening. The most likely mispricing is that traders may be conflating severe downsizing with true elimination; if the event requires USAID to cease to exist as a distinct entity, the odds should stay below 50 percent unless there is clear evidence of legislative momentum.
Arguments
For
- Trump has strong incentives to target USAID as a symbol of wasteful spending and globalist foreign aid.
- If the administration controls the executive branch and Congress, it could push an elimination bill or equivalent reorganization.
Against
- USAID is a statutory agency, so eliminating it outright is harder than merely cutting its budget or staff.
- Foreign-policy stakeholders and appropriators may resist a move that would abruptly disrupt aid commitments.
Key drivers
- Trump’s policy preference for cutting foreign aid creates real upside for a Yes outcome.
- Formal elimination likely depends on congressional cooperation and a durable legislative majority.
Risk factors
- The market may treat major restructuring or defunding as elimination even if the agency survives legally.
- Court challenges, bureaucratic resistance, and foreign-policy backlash could block a full shutdown.
Scenarios
Best case
Trump’s team secures congressional backing and USAID is formally abolished or absorbed into another department, satisfying the market’s Yes condition.
Most likely
USAID faces heavy pressure, staffing cuts, and possible restructuring, but survives as a distinct entity or is only partially absorbed rather than eliminated.
Worst case
Trump can only reduce funding or slow operations, while USAID remains legally intact and the market resolves No.
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