The good, the bad, and the ugly in Trump’s new regulation executive order

President Donald Trump issued a new executive order on regulation Friday reviving some of the core ideas from his first term. The order brings back the 1-in, X-out approach to regulatory reduction—this time expanding the original 1-in, 2-out policy to 1-in, 10-out. While this signals a renewed commitment to deregulation, the new order suffers from many of the same limitations that hampered Trump’s first-term regulatory reform efforts. If the goal is to make a meaningful dent in the administrative state, this EO does not go far enough.

Reviving good policies

Trump’s executive order largely reinstates the framework of Executive Order 13771 from 2017, which attempted to curb regulatory growth through a combination of cost limits and regulatory offsets. The new order revives and builds on these provisions in a few ways:

• A more aggressive 1-in, X-out rule: The shift from 1-in, 2-out to 1-in, 10-out sends a strong deregulatory signal to agencies.

• Reinstating the regulatory budget: The executive order establishes a regulatory budget that sets a cap on the total costs that federal agencies can impose through new regulations.

• Repealing Biden’s Circular A-4 update: In addition, the order revokes Biden’s 2023 revision to OMB Circular A-4, which had embedded progressive policy priorities into regulatory impact analysis. The decision to revert to the 2003 version is a clear repudiation of Biden’s politicized approach to economic analysis.

Repeating past mistakes

Despite its positive elements, the new order repeats many of the same mistakes that undermined Trump’s first-term regulatory reform efforts:

• Failure to cap costs of existing regulations: Like EO 13771, the regulatory budget applies its budget constraint only to new regulations. This means that the massive costs of existing rules—totaling trillions of dollars annually—remain unchecked. Without a plan to systematically count, cut and cap existing regulations, the total regulatory burden is unlikely to shrink meaningfully and may even continue growing.

• Loopholes in the 1-in, 10-out policy: Agencies can still game the system by repealing minor rules, guidance documents, or memos instead of offsetting high-cost regulations with other high-impact rules. This problem led to confusion and criticism surrounding EO 13771. Unless the administration creates a detailed inventory of rules, regulatory costs and offsets, history is likely to repeat itself.

• Modest cost reduction requirements in first year: The order merely requires agencies to ensure that new regulations result in “significantly less than zero” costs for fiscal year 2025. Given the 188,000 pages of federal rules on the books, this is hardly an ambitious goal.

• Reverting to old Circular A-4 no silver bullet: While Biden’s revisions to Circular A-4 were problematic, the 2003 version institutionalized its own set of flawed regulatory practices. Simply reverting to an older framework does not address the deeper problems with cost-benefit analysis in federal rulemaking.

Right direction, but more is needed

The most notable change from Trump’s first-term regulatory agenda is the adoption of a 1-in, 10-out policy, signaling greater ambition than before. However, without a comprehensive regulatory budget that accounts for existing rules and a strategy to achieve substantial cost savings, like an explicit percentage or dollar reduction goal, we are likely to see a repeat of EO 13771. That order led to a slowdown in new regulations, some modest deregulation, but no fundamental change in the overall regulatory burden.

As I noted in a 2018 paper with coauthor Laura Jones, the experience of British Columbia, Canada, which successfully cut its regulatory requirements by 48% over two decades, suggests that effective regulatory reform requires clear, measurable targets and broad coverage of all regulations—not just new ones.

In short, Trump’s new executive order is a good start, but if the goal is to achieve a meaningful reduction in regulatory burdens, more aggressive reforms will be needed.