The Trump administration is continuing to pressure the United Nations and the international aid sector more broadly to adopt trade-focused policies to benefit US firms – or face the threat of further budget cuts.

Donald Trump’s second term has already seen USAID suffer mass layoffs and have its remaining operations folded into the state department, with a ripple effect across the globe that has many experts warning will cost thousands of lives as vital programs are cut.

The Trump administration has also largely suspended support for agencies, including the World Health Organization, the UN human rights council and the UN’s cultural body Unesco.

Last week the Trump administration unveiled a “trade over aid” initiative at the United Nations, outlining a shift away from donor-focused development assistance toward greater private investment, or what it says is “an international economic development vision built on free markets”.

At the same time, the news website Devex reported on two US diplomatic notes that circulated in Geneva and New York that made it clear that the US was willing to use the threat of more budget cuts to the international community in order to force through its agenda.

One note obtained by Devex said the US would only pay “a significant portion” of its UN dues if the international body implemented a series of budget-slashing reforms ranging from overhauling the UN pension scheme to slashing travel costs. It also said that the US would only pay an additional payment to UN peacekeeping budgets in return for a 10 percent reduction in peacekeeping missions, Devex reported.

The Trump administration fired nearly all of USAID’s 16,000 employees when it dismantled the agency last year. An estimated 280,000 contractors, partners and local hires worldwide also lost their jobs as the impact of the move spread across the world into some of the most vulnerable populations.

Oxfam America has estimated that at least 23 million children could lose access to education, and as many as 95 million people would lose access to basic healthcare. Oxfam estimates there could be more than 3 million preventable deaths per year as a result of its closure.

After news of the US diplomatic notes spread, UN secretary general António Guterres said last week that the funds the US owes were “non-negotiable”. Earlier this year Guterres warned the UN faced “imminent financial collapse” due to unpaid fees, most ⁠of which ​are owed by the US.

There is little doubt the UN is stretched.

The UN’s refugee agency, the UNHCR, estimates 3.2 million people inside Iran and 1 million people in Lebanon have been displaced since the Iran war began two months ago. Coupled with staff cuts of 30% last year, the agency needs an additional $61m to support 600,000 people over just the next three months and its operations are “dramatically underfunded”, particularly in Lebanon, Syria, Iran and Afghanistan.

“The drop in global humanitarian funding is having a major impact on humanitarian actors at the very moment as needs are rising sharply,” the UNHCR said in an email to the Associated Press earlier this month. The UN’s Office for the Coordination of Humanitarian Affairs campaign to raise $23bn to support 87 million people worldwide this year is only a third funded.

The UN’s world food program estimates that nearly 45 million more people could face acute hunger if the war does not end by the middle of the year and if oil prices stay above $100 a barrel.

The US and the UN have often been at odds publicly but never to such an extent. In February, at a security conference in Munich, US secretary of state Marco Rubio criticized UN for having “virtually no role” in resolving conflicts and called for significant reforms.

In March, Rubio directed US diplomats to deliver a call to action to high-level foreign officials to sign on with their support for “trade over aid”.

US ambassador Mike Waltz said the initiative did not mean the US walking away from international aid, but instead meant “shift the old ways of doing business”.

“What you’ll typically hear is that the United States is walking away from aid, or are all the United States is walking away from the UN, it’s turning its back on the world. And I can tell you that couldn’t be further from the truth,” Walz said at a launch event for the trade over aid initiative.

Present at the event were representatives of US corporations including Walmart, Bank of America, Goldman Sachs and tech giant Palantir. “Free-market principles remain the best proven path to lasting prosperity, with better and more permanent results than any of the alternatives,” Walz said

Some say a pivot from aid to trade for aid may produce results. “The power of international trade to create benefits from increased competition, more variety, higher productivity, and increases in GDP is well established,” said Amrita Saha at the Institute of Development Studies.

But Saha warned that “trade creates both winners and losers, and the benefits are often unevenly distributed across countries, regions, sectors, and social groups. If trade dominates the development agenda without complementary policies and support, the result will be highly uneven gains and the reinforced inequalities that risk the future of global trade cooperation.”

“Trade cannot operate as disjoint with broader development goals,” Saha added.

But trade for aid is not a new idea, said Thomas Weiss, scholar of international relations and global governance with special expertise in the politics of the UN, now at the City University of New York.

“The irony of this stance is that the birth of the Group of 77 (G77) was at the plenary sessions for the United Nations conference on trade and development (formerly UNCTAD) in 1962 and the party line at that time was we want trade, not aid,” Weiss said.

Two years later, those 77 developing nations signed a declaration to promote collective economic interests.

The fight reflected the geopolitical politics of the moment, and coupled with the formation of Opec in 1960, put more power in the hands of the developing world until the 1980s. Weiss said that the ironies of the US trade for aid push may be lost on the US administration.

“This is a very complicated history,” he said.

But despite that pedigree, he said the current push by the administration driven – not by the long view of UN history – but by short term politics.

“Mainly, I think, it’s a justification to explain eliminating or cutting back USAID and every form of assistance, whether its humanitarian or development assistance, and many European countries have followed the US,” Weiss said.