Trump’s aid freeze leaves $238m health supplies stranded

About $238 million worth of health supplies have been stuck in warehouses and transit following the President Donald Trump’s decision to freeze aids through the United States Agency for International Development (USAID).

According to lawsuit details filed by contractors on Tuesday, $150 million in health products are stranded in warehouses, with $88.5 million in transit at risk of expiring, being damaged, or stolen.

The lawsuit warns that if those medical products are not delivered, as many as 566,000 people, including 215,000 children, could die from HIV/AIDS, malaria, and unmet reproductive health needs.

Also, Chemonics, which runs the Global Health Supply Chain Program, a procurement and supply management project, the largest USAID project ever had $240 million in contractual commitments for medicines and health supplies before the stop-work order.

The companies and non-governmental organisations that run USAID’s global programs sued the Trump administration over the aid freeze and the devastation of their work on Tuesday, according to Devex.

The lawsuit asks the courts to rule the administration’s actions unconstitutional and unlawful and reverse the foreign aid freeze.

The plaintiffs include the Global Health Council, the Small Business Association for International Companies, HIAS, Management Sciences for Health, Chemonics International, DAI Global, Democracy International, and the American Bar Association.

A key part of the legal case concerns the administration’s refusal to pay for completed work, placing a severe burden on implementers.

Democracy International, a small business, is owed nearly $3.4 million for work completed before the stop-work orders and aid suspension.

DAI is awaiting more than $120 million, and Chemonics has about $103.6 million in outstanding invoices for work performed in 2024. USAID has also not paid tens of millions more dollars to other plaintiffs in the lawsuit.

Given the significance of the arguments, this lawsuit along with a similar one filed on Monday on behalf of two nonprofits that receive United States foreign assistance could ultimately reach the Supreme Court, analysts say.

“We believe that this is likely to be appealed to the Supreme Court,” Robert Nichols, a partner at the Nichols Liu law firm, said.

Until now, many organizations impacted by the freeze including major contractors have remained silent, potentially fearing that suing the U.S. government could jeopardise future contracts. The calculus has now shifted.

The complaint argues that the administration’s “unlawful and unconstitutional exercise of executive power” has “created chaos in the funding and administration” of USAID and other foreign assistance programs, causing “grievous irreparable harm to plaintiffs and other grantees, contractors, and partners.”

According to the lawsuit, the president and other administration officials have sought to dismantle an independent agency established by the U.S. Congress and withhold billions of dollars of foreign assistance appropriated by Congress.

The lawsuit names President Donald Trump; Secretary of State Marco Rubio; Peter Marocco, acting USAID deputy administrator for policy and planning; Russell Vought, director of the Office of Management and Budget; USAID; the Department of State; and the Office of Management and Budget as defendants.

“One cannot overstate the impact of that unlawful course of conduct: on businesses large and small forced to shut down their programs and let employees go; on hungry children across the globe who will go without; on populations around the world facing deadly disease; and on our constitutional order,” the complaint says.

The lawsuit presents a detailed timeline of the administration’s actions regarding foreign aid — from the executive order pausing funding during a 90-day review to State Department and USAID directives halting most existing work, and official statements confirming frozen payments.

It argues that these actions exceed the executive branch’s authority and defy congressional funding mandates.

The plaintiffs ask the court to unfreeze foreign aid funds, declare the executive order and its implementation unlawful, and block the administration from dismantling USAID.

Issues

Much of U.S. foreign assistance is delivered by grantees, contractors, subcontractors, and other partners, many of whom have worked with USAID for decades. The administration has issued a series of vague directives to implement Trump’s executive order pausing foreign aid, and the complaint asserts that the “reality on the ground is even more dire than those directives would suggest.”

USAID and the State Department have suspended nearly all payments to existing partners, including for work completed before Trump took office, throwing organizations into turmoil and leading to thousands of job losses.

While the stop-work order memo from Rubio indicated it would only freeze new obligations, the reality is that almost all disbursements to partners have been halted, the lawsuit argues. In a court declaration filed on Monday in a separate case, Marocco said that USAID “has generally paused all expenditures in connection with foreign aid” for both new and existing programs.

While the State Department has issued some waivers, including for food aid and lifesaving humanitarian assistance, the lawsuit claims there is no formal waiver process, and what exists is “opaque and illusory.” Even funds that technically qualify for waivers have been slow to flow — or in some cases remain frozen.

A USAID inspector general report released on Monday found that the agency’s dismantling has severely weakened its ability to vet humanitarian awards for terrorist ties and monitor aid. “Far from combating waste, fraud, and abuse in U.S. foreign-assistance programs, Defendants’ actions have exacerbated it,” the lawsuit states.