US President’s executive orders targeting diversity and inclusion policies: examining possible impacts on Federal Government Programs and Businesses
Gayathri Sunil
Background details of the executive orders
On January 20 and 21, 2025, President Trump signed a series of executive orders aimed at rolling back policies from the Biden administration. Among these, two orders specifically target diversity, equity, and inclusion (DEI) initiatives, arguing that “illegal DEI” is a “guise” for racial and sex-based preferences. In his January 20, 2025, Executive Order titled “Ending Radical And Wasteful Government DEI Programs And Preferencing” (EO 14151), President Trump mandates the elimination of federal DEI, DEIA, and “environmental justice” offices and positions. The order directs agencies to remove Chief Diversity Officer roles, cancel equity action plans from the Biden administration, and end all DEI-related initiatives, grants, contracts, and employee performance requirements linked to diversity or equity.
In a second executive order on January 21, 2025, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity”, the Trump administration directed all federal departments and agencies to end internal DEI practices, placing DEI employees on leave. The order also called for the elimination of “illegal” DEI preferences in the private sector. The Attorney General, alongside other agency leaders, was tasked with developing a strategic enforcement plan and recommendations for ensuring compliance with federal civil rights laws and ending DEI-based discrimination in the private sector.
The most significant provision is the rescinding of Executive Order 11246, signed by President Lyndon B. Johnson in 1965, which integrated civil rights priorities into federal contracting. This order, now revoked, required government contractors to include non-discrimination clauses in contracts and job postings, pledging not to discriminate based on race, creed, color, or national origin.
Years in the Making: The Growing Backlash Against DEI Policies in Corporate America
Even before November’s election, companies began auditing their DEI programs for potential legal risks. Walmart recently ended some of its DEI initiatives, while Boeing disbanded its DEI department. Several companies have also reduced their focus on diversity for corporate boards. A December report revealed that the percentage of new S&P 500 directors classified as people of color dropped to 24% in 2024, down from 34% in 2022. DEI has been blamed by conservatives for various corporate and government failures- critics have linked it to the 2023 collapse of Silicon Valley Bank, the IT outages at CrowdStrike that led to mass flight cancellations in July, and Secret Service lapses during assassination attempts on Trump.
Future implications of Trump’s executive orders for Federal Govermnent Programs and the Private Sector
The executive orders have raised concerns about the impact on various government programs, including the Disadvantaged Business Enterprise (DBE) program, which prioritizes businesses owned by "socially and economically disadvantaged individuals" for federally funded contracts. While the long-term effects are still uncertain, there’s a possibility that government agencies may scale back DBE contract requirements or even abandon the program entirely.
The DBE program aims to provide fair opportunities for small businesses owned by socially and economically disadvantaged individuals to secure federally funded transportation contracts. However, its race and gender classifications are currently being challenged in federal court under the Equal Protection Clause. While the Department of Labor previously defended the program’s constitutionality, it’s uncertain whether the new administration will do the same. As a result, multiple DBE advocacy groups have sought to intervene in the lawsuit. If the Executive Orders remain unchallenged, they could accelerate the end of the DBE program.
This could also impact the private sector, as one of the executive orders directs the Attorney General’s office to provide recommendations for enforcing federal civil rights laws and taking measures to encourage businesses to end illegal discrimination and preferences, including DEI practices. This could lead to greater pressure on companies to reassess or scale back their DEI initiatives.
Trump’s strong anti-DEI stance has created what advocates describe as a “chilling effect,” with companies preemptively scaling back or ending their DEI policies, including those established after George Floyd’s murder, out of fear of backlash. Target, for example, has become the first major U.S. company to end its DEI initiatives since Trump took office. In June 2020, Target announced $10 million in funding for social justice initiatives, stating it "stands with Black families, communities, and team members," and later committed to increasing the number of products from Black-owned brands. However, the retailer recently revealed it will stop publicly reporting its DEI goals, which it has done for over a decade, and will conclude career-building programs for Black employees “as planned” in 2025, among other changes.