Measure requires federal contracts to include clauses explicitly prohibiting the adoption of these practices
O United States President Donald Trump signed on March 26, 2026 a executive order determining that companies contracted by the federal government eliminate diversity, equity and inclusion practices (DEI) considered illegal or discriminatory. The measure is part of a broader strategy of the current administration to restrict this type of policy in both the public and private sectors.
What determines the new order
A executive order requires federal contracts to include clauses explicitly prohibiting the adoption of DEI practices by contractors and their subcontractors.
In practice, this means that:
- Companies that provide government services will not be able to maintain DEI programs that involve preferences based on race, gender or other identities
- New contracts must contain certifications of compliance with anti-discrimination laws
- The government may penalize companies that fail to comply with the rules
In addition, federal agencies now have authority to:
- Cancel or suspend contracts
- Prevent companies from participating in future tenders (debarment)
The order assigns direct functions to federal government bodies:
- The Office of Management and Budget should advise agencies on how to apply the new rules
- The U.S. Attorney General is expected to review potential violations and prioritize related prosecutions
There is also provision for monitoring economic sectors in which DEI practices are more common, indicating a possible increase in supervision over large companies contracted by the government.
The Trump administration maintains that certain DEI policies constitute illegal discrimination by favoring specific groups. According to this view, corporate programs that establish diversity goals or preferences may violate federal civil rights laws.
That interpretation had already been consolidated since the beginning of the mandatewith other executive orders that:
- Eliminated DEI programs within the federal government
- Repealed historic affirmative action rules for contractors
One of these earlier measures repealed a rule in effect since 1965 that required affirmative action from companies with federal contracts. The new order is not an isolated act. Since 2025, the government has been adopting a series of measures to reduce or eliminate DEI policies:
- Termination of diversity programs in federal agencies
- Pressure on private companies to review internal initiatives
- Encouraging investigations into corporate practices considered discriminatory
The Department of Justice, for example, began investigating companies hired under suspicion that diversity programs may violate federal laws, including those based on the False Claims Act.
A decision affects a broad universe of companies that depend on public contracts — from large technology companies to service providers and construction companies.
These companies may have to:
- Review internal diversity policies
- Change recruitment and promotion programs
- Adapt corporate training
- Issue legal certifications of compliance
Furthermore, the risk of sanctions creates an environment of greater caution, especially for companies that operate globally and maintain diversity policies in other countries. The measure generated strong division in the United States.
Critics, including civil rights organizations, claim that DEI policies are essential to combat historical inequalities faced by minoritieswomen and LGBT people.
Supporters of the decision argue that:
- Identity-based programs can generate reverse discrimination
- Hiring must be based exclusively on merit
To be debate reflects a broader dispute over the role of the state and companies in promoting equality. Similar measures have already faced challenges in court. In 2025, courts even temporarily blocked parts of orders related to DEI, pointing out possible violations of constitutional rights, such as freedom of expression.
On the other hand, more recent decisions have allowed anti-DEI policies to advance, reinforcing the Executive’s power to define priorities in federal contracts. Experts estimate that the new order should generate a new round of legal disputes, possibly reaching the Supreme Court.
The executive order could have effects that go beyond the federal government:
- Influence on corporate policies in the private sector
- Impact on labor market inclusion programs
- Change in the way companies structure their human resources practices
There is also potential international impact, as multinational companies will have to reconcile different rules between countries.
A decision reinforces a significant change in United States public policys, replacing diversity policies with an approach focused on individual merit and strict interpretation of anti-discrimination laws. At the same time, it opens a new chapter of legal and political disputes over equality, civil rights and the role of companies in society.
*This text does not necessarily reflect the opinion of Jovem Pan.
