Trump’s deregulatory sweep
The Trump administration’s fast-moving reforms are redefining the U.S. regulatory state.
In a nutshell
- The U.S. is implementing its most ambitious deregulatory drive in decades
- Executive orders are reshaping regulation, and administrative procedures
- A legal and political divide is widening between the U.S. and Europe
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The second Trump administration, in its first 12 months, is instituting a wide-ranging regulatory overhaul to cut red tape and reduce regulation. The reforms are central elements of the president’s goals to reshore manufacturing, boost productivity and investment, and enhance the global competitiveness of the United States. To the extent the president succeeds – despite persistent opposition – pressure will intensify on European nations to likewise ease regulatory burdens.
President Donald Trump’s pursuit of regulatory transformation is not confined to the U.S. In the newly released U.S. National Security Strategy, the administration admonished the European Union’s “failed focus on regulatory suffocation,” while blaming its weak economic output on “national and transnational regulations that undermine creativity and industriousness.”
America’s federal regulatory landscape is also vast, consisting of more than 190,000 pages and 245 volumes of code, an increase of 38 percent in just the past two decades. There is no definitive calculation of the cost to the private sector, although various sources estimate the total between $2 trillion and $3 trillion annually. The paperwork burden alone now exceeds 11.7 billion hours at a cost of $204 billion annually.
Every new administration in the modern era has undertaken major regulatory reforms. President Ronald Reagan (1981-1989), for example, issued an executive order in 1981 requiring all major regulations to undergo a cost-benefit analysis. President Bill Clinton (1993-2001) enhanced the Reagan reforms in 1993 by requiring that the benefits of a new rule justify the costs. In 2011, President Barack Obama (2009-2017) instituted new requirements for retrospective reviews of existing rules to reduce regulatory redundancy.
Beyond procedural reforms, all new administrations also reset regulatory priorities, whether through legislation, budgeting or presidential directives. Generally speaking, Democratic administrations have expanded the scope of federal regulatory power more so than their Republican counterparts – exceptions being Presidents Richard Nixon (1969-1974) and George W. Bush (2001-2009). But most observers agree that the Trump administration’s reform agenda is unparalleled in pace and scope, upending longstanding administrative procedures and enforcement regimes.
The dramatic regulatory shift is evident in the administration’s newly released “Unified Agenda,” which contains far fewer active rulemakings than comparable publications from predecessors Joe Biden, Barack Obama and George W. Bush. At the same time, 41 percent of the Trump agenda entries appear for the first time – double the share under the Biden and Obama administrations, and more than triple that under Bush – underscoring the extent to which the administration has reset regulatory priorities rather than building on inherited initiatives.
Exercising executive power
Faced with partisan gridlock and the complexity of the federal bureaucracy, presidents from both parties in recent years have increasingly sidestepped Congress and formal rulemaking procedures to accomplish their regulatory goals. The use of executive orders, in particular, which are unilateral presidential directives with the force of law, has become more common, sparking fierce debate about the parameters of Oval Office power.
President Obama signaled a turning point in 2014, when he famously pledged to bypass a recalcitrant Congress, declaring: “We are not just going to be waiting for legislation in order to make sure that we’re providing Americans the kind of help that they need. I’ve got a pen, and I’ve got a phone.”
The number of executive orders has varied dramatically over time. President Franklin D. Roosevelt issued the largest number – 3,726 – but he held office for more than 12 years spanning the Great Depression and World War II. The annual averages of recent presidents range from 46 under President Clinton to 55 during the first Trump administration.
So far this year, President Trump has issued 210 executive orders – the largest first-year total since FDR (at 568). The volume is dramatic, to be sure, but there is a correlation between the unilateral powers granted to the president under the U.S. Constitution and the aim of the directives. A nexus with foreign affairs provides greater justification for unilateral action. Among the Trump orders, 25 percent involve foreign policy; 16 percent address executive branch operations; and 15 percent relate to tariffs and trade.
Reining in the rule makers
Two early directives highlight the administration’s quest to curtail the regulatory state. The first – one of 26 issued on inauguration day – established a new (albeit temporary) Department of Government Efficiency (DOGE). Its charge: “modernizing Federal technology and software to maximize governmental efficiency and productivity.”
The DOGE portfolio was broadened one month later under Executive Order 14219, which directs the agency “to commence the deconstruction of the overbearing and burdensome administrative state.” In practical terms, agencies had to work with DOGE personnel to review all regulations and to prepare to rescind or modify those deemed inconsistent with law and administration policy.
Also notably, President Trump’s Executive Order 14192 directs agencies to identify at least 10 regulations for elimination for every new rule adopted, and the total savings from repealed rules must “significantly” exceed the total cost associated with new ones. This was followed by Executive Order 14215, which for the first time directs so-called “independent agencies” (such as the Federal Trade Commission, Securities and Exchange Commission, and National Labor Relations Board) to submit significant regulatory proposals to the White House for review – as do most other regulatory agencies.
More recently, Executive Order 14270 calls for embedding sunset clauses into rules to trigger automatic expiration unless a regulation is explicitly reauthorized. The directive represents a major shortcut in the protracted process that otherwise may take years to repeal a single rule.
Energetic deregulatory moves
The administration’s reform agenda is comprehensive, but particular attention is focused on energy and environment-related regulations because of their massive economic and opportunity costs. This focus on the green agenda is all the more consequential for Europe given its punishing “decarbonization” regimes.
On his first day in office, for example, President Trump issued Executive Order 14154 to “unleash” American energy resources by streamlining infrastructure projects and expanding access to federal lands and waters for exploration. The order rescinded 12 of the Biden administration’s signature global warming initiatives.
A companion Executive Order 14156 declared a “national energy emergency,” whereby agency heads are directed to “exercise any lawful emergency authorities available to them, as well as all other lawful authorities they may possess, to facilitate the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources.”
Critics contend that the administration’s executive orders are steamrolling the formal rulemaking process. However, most global warming-related regulation is not rooted in statute but instead based upon an Obama-era “endangerment finding” that atmospheric concentrations of carbon dioxide and five other so-called greenhouse gases are a danger to public health and welfare. That 2009 document has been the subject of intense scientific and legal dispute ever since. President Trump on day one of his second term directed the Environmental Protection Agency (EPA) to review the “legality and continued applicability” of the endangerment finding, thereby triggering an agency proposal in July to rescind it. Public hearings and a comment period ensued, and a final rescission is expected soon.
Federal permitting delays resulting from endless bureaucratic and judicial wrangling have long plagued infrastructure and energy-related projects. Under the National Environmental Policy Act of 1970 (NEPA), the average “impact statement” required for permitting runs 669 pages and requires an average of 4.5 years to complete. At President Trump’s behest, and conforming with recent rulings by the U.S. Supreme Court, the onerous and outdated NEPA rules have been rescinded. Agencies are in the process of crafting narrower, accelerated permitting procedures.
The shifting legal landscape
Opponents of the Trump administration seek judicial remedies to impede the reforms. But several recent landmark rulings by the U.S. Supreme Court reinforce the president’s efforts to moderate the regulatory state, including:
- Loper Bright Enterprises v. Raimondo, in which the court overturned the long-held (and widely abused) deference afforded to agencies’ own interpretations of their powers in ambiguous statutory provisions.
- West Virginia v. EPA, which revives the “Major Questions Doctrine” – the principle that agencies cannot act without clear, explicit authorization from Congress, rather than relying on vague or implied powers.
- Sackett v. EPA, which strictly narrows the EPA’s extensive regulation of wetlands on private property.
- SEC v. Jarkesy, which restricts the use of agencies’ internal administrative courts to adjudicate common-law claims.
These and several other cases are cited in a recent presidential memorandum requiring agencies to revoke a multitude of regulations deemed unlawful by the rulings.
A widening regulatory divergence
EU leaders are acutely aware of the potential competitive advantages posed by President’s Trump’s reforms. Indeed, following years of unconstrained regulatory expansion, the European Commission earlier this year presented a Competitive Compass, characterized as “a new roadmap to restore Europe’s dynamism and boost our economic growth.” Chief among the proposals: “[M]aking it easier for companies to operate across the EU by simplifying rules and laws, with a proposal for a 28th legal regime that will guarantee one set of rules across the EU.”
Some EU members are pressing for more than mere simplification. Some 19 EU leaders – including Friedrich Merz of Germany, Emmanuel Macron of France, Giorgia Meloni of Italy and Donald Tusk of Poland – reportedly issued an appeal for “a systematic review of all EU regulations to identify rules that are superfluous, excessive or unbalanced.”
More on deregulation
- From free citizens to complying subjects
- Competitiveness and business in a fragmented world
- From Enlightenment to Entitlement: Europe’s quest for comfort reveals a cultural crisis
Predictably, the reform proposals have met with a wave of opposition from those who regard EU reform as a sop to President Trump, and anathema to the progressive agenda. They likely draw inspiration from their American counterparts who challenge every Trump reform regardless of merit.
The extent to which the president ultimately succeeds in mitigating decades of regulatory excess will depend on several factors. Numerous rules have been slated for repeal but still face years of legal challenge. There is no dispute, however, that the Trump administration has already dramatically reduced the volume of new regulation. That alone should spur the EU and other nations to follow suit for their own competitive benefit.
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