Anticompetitive regulatory distortions are a major drag on the U.S. economy. President Donald Trump’s April 9 “Executive Order on Reducing Anti-Competitive Regulatory Barriers” has the potential to drive dramatic U.S. economic growth. Implementation of the executive order may be expected to face legal challenges and opposition from special interests who benefit from the status quo. A substantial reduction in federal regulatory burdens could benefit American businesses and families directly. It could also provide the Trump administration with negotiating leverage to obtain a reduction in harmful foreign anticompetitive international trade distortions.
Background: The Harm from Anticompetitive Regulations
Numerous scholarly studies document that regulations impose large and excessive economic costs.
Casey Mulligan of the University of Chicago explained in 2023 congressional testimony that federal rules finalized in 2021 and 2022 imposed $5,000 of additional annual costs per-household. He also calculated a higher household regulatory burden of $40,000 over eight years if the 2021-2022 trend continued.
Mulligan added that distortion of competition is a major source of these burdens:
[M]ere clerical “red tape” is merely the tip of the regulatory-cost iceberg. Complying with a regulation often involves high opportunity costs (foregone opportunities for businesses to trade, innovate, and realize their full potential). Moreover, “many rules protect a type of business from competition, sometimes by erecting barriers to new market participants and other times by outright prohibiting competing goods and services.” This skews market outcomes, reducing market-generated economic benefits.
DOJ Regulations Task Force
In an initial effort to address this problem, the U.S. Justice Department (DOJ) on March 27 announced the launch of an anticompetitive regulations task force to advocate for elimination of anticompetitive state and federal laws and regulations that undermine free-market competition and harm consumers, workers, and businesses.
The DOJ noted that regulations that erect high barriers to competition make it more difficult for businesses to compete effectively, especially in markets that have the greatest impact on American households. These include housing, transportation, food and agriculture, health care, and energy markets.
The department also stressed that these “undue burdens” often arise form “regulatory capture” of government by special interests and big business. The DOJ added that it would invite public comments to support the Trump administration’s mission to unwind laws and regulations that hinder business dynamism and make markets less competitive.
The April 9 Executive Order
The April 9 executive order goes far beyond nonbinding DOJ task-force advocacy, by creating a blueprint for direct government action against anticompetitive rules. In short:
- Within 70 days, the heads of all federal executive agencies (including independent agencies) must provide the DOJ and the Federal Trade Commission (FTC) with a list of all their regulations that impose anticompetitive restraints or distortions (such as the protection of monopolies or favored firms).
- Within 90 days of receiving the lists, the FTC chairman—in consultation with the DOJ, agency heads, and the White House—will present the Office of Management and Budget a consolidated list of regulations that merit rescission or modification in light of their anticompetitive effects.
- The OMB director will then consult with relevant agency heads, the FTC, the DOJ, and the White House in deciding whether to implement the proposed rescissions and modifications as part of the administration’s deregulatory agenda.
The executive order’s timetable envisions the possible elimination or modification of large numbers of anticompetitive regulations by the fall.
Possible Legal Challenges
Court challenges may be expected against regulations targeted for elimination or modification. For example, incumbent businesses may argue that they are “harmed” by losing special regulatory benefits that gave them a leg up over their rivals (no matter that consumers and competition benefit from these changes).
Recent U.S. Supreme Court decisions and a new presidential memorandum may help the Trump administration resist these lawsuits.
An April 9 “Presidential Memorandum on Directing the Repeal of Unlawful Regulations” orders agency heads to identify existing regulations that are facially unlawful. In so doing, it highlights 10 recent Supreme Court decisions that cut back on overly broad agency assertions of regulatory authority. Indeed, these decisions may actually require the elimination of certain rules, according to the memorandum.
The memorandum also emphasizes that agencies may avoid time-consuming public “notice and comment” proceedings by invoking the “good cause” exception of the Administrative Procedure Act (the federal law governing rulemaking) to scrap unlawful regulations.
Nevertheless, novel legal questions arising from large-scale regulatory changes likely will lead to some costly delays in deregulatory improvements. Thus, the degree to which the administration will eventually succeed in eliminating many anticompetitive rules is uncertain.
International Trade Implications
Anticompetitive federal regulations do not only hurt Americans. They also may create barriers to entry and impose other costs on foreign businesses seeking to enter the U.S. market, through exports or foreign investment.
As such, rescinding many problematic U.S. regulations could give the Trump administration great leverage in its efforts to reduce high foreign nontariff trade barriers—an important American trade priority.
An April 2 administration fact sheet cited specific practices of other nations in explaining that “non-tariff barriers – meant to limit the quantity of imports/exports and protect domestic industries – . . . deprive U.S. manufacturers of reciprocal access to markets around the world.” Many of these barriers are anticompetitive rules, similar in effect to the federal anticompetitive regulations that the administration seeks to rescind.
Anticompetitive foreign nontariff barriers—discussed at length in the administration’s 2025 trade policy agenda—are a type of anticompetitive market distortion. Trade-related ACMDs, which are on the rise, are more trade-restrictive (an estimated $1.4 trillion in losses in 2019) and economically harmful than tariffs.
In short, highlighting the planned rescission of American anticompetitive regulations would provide American negotiators a carrot demonstrating U.S. commitment to a less regulatory (and freer) future international trade regime.
