Some Trump Administration officials felt the programme had failed to achieve enough results, and in recent months have been looking into alternatives. But the President's decision to cut off the remaining funds appeared to take many people by surprise.
It came just a day after Kirstjen Nielsen, the secretary of Homeland Security, signed what the department called a "historic" memorandum of cooperation on border security in Central America.
One former US official said there was "chaos" in the State Department and embassies overseas as officials tried to figure out whether they had to cancel existing contracts, or simply not renew them.
The number of apprehensions along the US-Mexico border has been soaring, with more than 76,000 migrants taken into custody in February, most from Central America. Yesterday, during a trip to Florida, Trump faulted governments in the region for the increase.
"I've ended payments to Guatemala, to Honduras and El Salvador. No more money is going there anymore," Trump told reporters. "We were giving them US$500 million. We were paying them tremendous amounts of money, and we're not paying them anymore because they haven't done a thing for us."
Democratic officials, aid groups and former officials said Trump's action could boomerang, by shrinking or eliminating some of the very programmes keeping would-be migrants in Central America.
"Ironically, our goals of having people stay and thrive in El Salvador are very similar to the current administration's," said Ken Baker, chief executive of at Glasswing International [glasswing.org], which runs education, health and entrepreneurship programmes in El Salvador and receives USAID funding. "Through our programmes we've been able to provide opportunities and the belief that they [would-be migrants] can thrive here."
"The key is to get to them before" they leave for the United States, he said. "When you're talking about the problem at the border in the US, it's already too late."
Jim Nealon, a former US ambassador to Honduras, said that Trump didn't seem to understand the way the Central American aid programme worked. The US Government doesn't give the money to foreign governments, but rather "to programmes designed and implemented by the US, with the cooperation of governments and civil society," he said. Much of them are administered by nonprofit groups.
He also said Central American governments aren't seeking to send their citizens to the US. "To the contrary, they already cooperate with us in trying to deter migration. But they can't prevent their citizens from leaving the country."
Honduras, El Salvador and Guatemala are among the poorest countries in the hemisphere, and among the most violent in the world.
Over the past year, Trump has seized on the formation of giant caravans of US-bound migrants as evidence that Mexico and Central America are doing little to discourage migration.
