Trump Deregulation Effort Stalls With Few Rules Cut in Year One
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
deregulationtrump-administration
Fazen Markets Editorial Desk
Collective editorial team · methodology
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A White House plan to rapidly repeal federal regulations has produced limited results, with only a small number of rules eliminated through an expanded administrative shortcut since a comprehensive review was ordered over a year ago. The initiative, a key component of the administration's pro-business agenda, has encountered significant procedural and legal hurdles that have slowed its implementation. The analysis, discussed by Bloomberg Law Principal Legal Reporter Robert Iafolla, indicates a slower-than-anticipated pace for regulatory rollback. This development is being monitored by markets for its implications on compliance costs and operational flexibility for regulated industries.
The current deregulatory push was formally launched with an executive order in early 2025, expanding the use of the Congressional Review Act (CRA). The CRA allows Congress to overturn recently enacted regulations with a simple majority vote, but its application to older rules is legally contentious. This effort mirrors attempts by previous administrations to streamline the federal code, though with a more aggressive timeline. The Biden administration repealed 21 rules using the CRA in its first year, while the Trump administration successfully overturned 16 rules during the same period in 2017.
The macro backdrop features elevated interest rates and persistent inflation, increasing the focus on government policies that affect business costs. Regulatory compliance represents a significant operational expense for sectors like financial services, energy, and healthcare. The stalled pace of deregulation suggests that anticipated cost savings for these industries may not materialize as quickly as some investors had projected. This comes amid broader debates over the economic impact of regulation versus the benefits of consumer and environmental protections.
The review process has resulted in the repeal of fewer than ten significant rules to date. The administration initially targeted dozens of regulations for potential elimination under the expanded CRA framework. A comparative analysis shows a significant gap between the number of rules proposed for repeal and the number successfully invalidated.
| Metric | Current Effort (Since 2025) | Trump Admin (2017) | Biden Admin (2021) |
|---|---|---|---|
| Rules Targeted | Dozens | 67 | 32 |
| Rules Repealed | <10 | 16 | 21 |
| Success Rate | <15% | ~24% | ~66% |
The slow progress contrasts with the performance of major stock indices. The SPDR S&P Bank ETF (KBE) is up approximately 4% year-to-date, underperforming the S&P 500's 12% gain over the same period. This underperformance may reflect, in part, diminished expectations for near-term regulatory relief for the financial sector. Legal challenges have been a primary impediment, with courts scrutinizing the novel application of the CRA to rules enacted years or even decades ago.
The stalled deregulation has direct implications for policy-sensitive equities. Companies in the energy sector, such as those within the Energy Select Sector SPDR Fund (XLE), face delayed regulatory tailwinds related to environmental permitting and extraction rules. Similarly, financial institutions like JPMorgan Chase (JPM) and Bank of America (BAC) may see a slower-than-expected reduction in compliance costs associated with Dodd-Frank and consumer protection rules. The SPDR S&P Regional Banking ETF (KRE) is particularly sensitive to changes in capital and lending regulations.
A counter-argument suggests that a deliberate, legally sound process may prevent future reinstatements of repealed rules, creating more durable policy outcomes. However, the immediate market impact is a tempering of optimism regarding regulatory easing. Investor positioning data indicates a reduction in net long exposure to small-cap stocks, which are often perceived as primary beneficiaries of deregulation due to their higher relative compliance cost burdens. The iShares Russell 2000 ETF (IWM) has seen net outflows of $1.2 billion over the past quarter.
The primary catalyst will be the outcome of ongoing litigation challenging the administration's use of the CRA. Key court rulings are expected in Q3 2026, with the D.C. Circuit Court's decision being particularly pivotal. A favorable ruling could unlock a pipeline of delayed repeals, while an adverse ruling could effectively halt the strategy. The next batch of rules slated for review is scheduled for announcement by the Office of Management and Budget in late July.
Market participants should monitor hearings for nominees to key regulatory positions, including the Securities and Exchange Commission and the Federal Energy Regulatory Commission. Confirmation of business-friendly appointees could signal a shift towards alternative deregulatory methods if the CRA path remains blocked. For sector ETFs like XLE and KBE, a decisive legal victory for the administration could serve as a positive catalyst, potentially pushing these funds above their 200-day moving averages, which have acted as technical resistance.
The Congressional Review Act is a 1996 law that provides a mechanism for Congress to nullify federal regulations issued by government agencies. It typically applies to rules finalized within the last 60 legislative days. The current administration is testing the legal boundaries of the CRA by applying it to regulations that are several years old, arguing that a previous Congress did not have a proper opportunity to review them. This expansive interpretation is the subject of significant legal debate and could redefine the scope of congressional oversight over the regulatory state.
Deregulation can indirectly impact the fiscal deficit through its effect on economic growth and government revenues. Proponents argue that reducing regulatory burdens stimulates business investment and job creation, leading to higher tax receipts. The Congressional Budget Office has historically estimated that major regulatory reforms can increase GDP growth by 0.1 to 0.2 percentage points annually over a decade. The stalled pace of repeal suggests these potential economic and fiscal benefits will be delayed, if they materialize at all, leaving current deficit projections largely unchanged.
The financial services, energy, healthcare, and telecommunications sectors were positioned for the greatest benefit. For banks, eased capital and lending rules could improve profitability. Energy companies anticipated faster project approvals and relaxed emissions standards. Healthcare providers looked for reductions in administrative paperwork from agencies like the Centers for Medicare & Medicaid Services. The telecommunications industry awaited simplified broadband deployment rules. The slow progress means these sectors continue to operate under the existing regulatory framework, postponing potential operational efficiencies and cost savings.
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