The US has withheld $195m in military aid and cut $96m in other aid for Egypt over human rights concerns.
A statement from Egypts foreign ministry said the move reflected poor judgment.
On 22 August, US newspaper the Washington Post cited US officials as saying that Secretary of State Rex Tillerson had notified Foreign Minister Sameh Shoukry by telephone of his decision to withhold $195m of the $1.3bn Egypt receives in military aid, and to reallocate to other countries $65.7m in additional military aid and $30m in economic aid.
Although President Abdel Fatah al-Sisi has come under international criticism for his crackdown on dissent, the US administration has mostly raised concerns over a new law that regulated NGOs in Egypt.
The law states that NGOs are prohibited from conducting activities that harm national security, public order, public morality or public health, strictly controls their funding, and gives the government the authority to monitor their activities.
Al-Sisis human rights record has caused the ex-defence minister problems at home and abroad. Rights groups say there are currently up to 40,000 political prisoners in Egyptian jails. Cairos crackdown on dissent is being painted as an attack on the outlawed Brotherhood, despite many of these prisoners being liberal activists, lawyers and journalists.