Which agencies will Trump eliminate?
USAID has a meaningful chance of being effectively dismantled or formally absorbed, but full statutory elimination is still harder than a simple budget cut. I put the probability of a Yes outcome at 38%.
Analysis
USAID is one of the most politically exposed federal agencies because it sits at the intersection of foreign aid, bureaucracy, and longstanding conservative criticism of overseas spending. If Trump has the political capital to pursue a broad restructuring of the executive branch, USAID is a plausible target because it can be weakened through budget cuts, personnel reductions, program transfers, and mission compression even before any formal legal abolition happens. In practical terms, markets should distinguish between an agency being functionally neutralized and being erased in a clean statutory sense, since the former is much easier to achieve than the latter.
The main obstacle is that true elimination of USAID is not just a presidential preference question. A formal end to the agency likely requires congressional cooperation or, at minimum, a durable reorganization that survives legal and political challenge. That makes the path to a No outcome significant even if the administration aggressively tries to dismantle it. Foreign aid also has a coalition of defenders, including some Republicans, defense hawks, contractors, and humanitarian groups, which raises the odds that any effort becomes partial restructuring rather than complete elimination.
Compared with the current market price of 26% Yes, I think the market is somewhat low, but not wildly so. The price appears to underweight the possibility of de facto elimination through attrition, merger, or transfer of functions, which may satisfy the event depending on how it is resolved. Still, because formal elimination is legally and politically difficult, I would not push the probability into the majority range.
Arguments
For
- Arguments for Yes: USAID is politically unpopular with many budget cutters and can be targeted early in a reform agenda.
- Arguments for Yes: A determined administration can severely weaken the agency without waiting for a full legislative consensus.
Against
- Arguments against Yes: Formal abolition likely needs congressional action or a legally durable reorganization that may not be feasible.
- Arguments against Yes: Foreign aid has enough institutional support that partial downsizing is more likely than complete elimination.
Key drivers
- Trump and allied policymakers have repeatedly signaled hostility toward foreign aid bureaucracy, making USAID a natural target.
- The event can be satisfied by functional dismantling or formal abolition depending on the market’s resolution rules, and the easier path is to hollow out the agency rather than pass a clean repeal.
Risk factors
- Congressional and legal constraints may block a true elimination even if the administration wants one.
- The market may require an explicit and unambiguous end to the agency, which is much harder than cutting its funding or moving programs elsewhere.
Scenarios
Best case
The administration aggressively restructures foreign aid, transfers key functions out of USAID, and the market interprets that as elimination, producing a Yes outcome.
Most likely
USAID faces major budget and staffing pressure, but the end state is partial overhaul or absorption rather than a clean, universally recognized elimination.
Worst case
USAID survives as a named agency through the end of the term, even if it is badly cut and operationally weakened.
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