The Impact of Trump's 2025 Executive Actions on State, Local and Education (SLED) Government Funding

Important Update: The Office of Management & Budget (OMB) rescinded the previously announced overall federal grant funding pause. Uncertainty continues as other freezes and orders remain, and the Trump administration continues to analyze spending items and determine alignment with initial executive orders and policy initiatives.

Electric Vehicle (EV) Infrastructure Funding Freeze (Executive Order #14154)

The administration issued an executive order pausing funding for electric vehicle infrastructure and provision investments included in the Infrastructure, Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA). Executive orders can also target other environmental or climate initiatives, which can affect various offices and initiatives set up to address these matters.

• Funding Pause: This halts over $50 billion in funding that was to be distributed to SLED governments for EV infrastructure and related provisions to promote electric vehicles.
• Impact on Plans: This pause risks altering SLED plans and objectives for creating a more accessible EV charging grid, along with other initiatives to promote EVs.

Tariffs and Trade Policy (Executive Order #Unknown, Actions Taken or Memo)

Proposed tariffs on imports could raise the cost of goods and services needed by SLED governments, leading to inflation and higher prices for essential materials and products.

• Cost Increases: Proposed tariffs on imports could raise the cost of goods and services needed by SLED governments, leading to inflation and higher prices for essential materials and products. We’ve already seen how recent pandemic era inflation caused over $100 billion more spending on commodities—which was “papered over” by the large stimulus plans. If tariffs create additional inflation and further rises in commodities, these increases likely would be too difficult and necessitate larger cuts in other areas such as more discretionary services or projects that can be delayed without too much pushback.
• Strained Budgets: This could strain procurement budgets, forcing governments to seek costlier suppliers or reduce project scopes.
• Planning and Negotiation Challenges: The uncertainty and volatility from tariffs could complicate long-term planning and contract negotiations.

Anti-DEI Impacts (Executive Order #14151)

DEI changes at the federal level can affect diversity programs, rules and “fair competition” processes used in SLED government and potentially the contractors themselves. The administration has threatened to withhold funding from states that do not align with its stances on DEI, immigration, climate, and other issues, potentially jeopardizing funding for specific projects in states that support these fields.

• Government DEI offices may be closed and staff let go.
• Contractors who serve SLED governments from conservative states may be expected to follow suit to please their respective government customers.
• Contractors who win contracts jointly funded by SLED and FED may be forced to remove any DEI language, policies or offices as needed.

Border Security and Illegal Immigration (Executive Order #14159 & #14165)

Changes to immigration policies and efforts to cut back on undocumented migrants can introduce new challenges:

• New efforts to construct or fortify border fences or walls.
• Additional public safety staff or officers, particularly in border states.
• Expanding legal services and in-house legal staff.
• Privacy, reporting and billing challenges among health care offices and clinics.
• Efforts to encourage social services offices to report the identities of poor and needy individuals and families being assisted.

Public Education Changes Related to School Choice, Diversity and Anti-Semitism

Three executive orders have been issued, directing federal authorities to modify educational grant funding and school policies to permit public funds to be allocated to private, public charter, and religious school alternatives, oppose the teaching of gender identity and race-related topics, and implement additional measures to monitor and combat anti-semitism. These changes could significantly impact SLED public educational institutions and the vendors and consultants that serve them.

• Potential reductions in funds available for traditional public schools due to funding being diverted to non-traditional school options including religious, private and charter schools.
• Potential changes to curriculum and teaching materials.
• Additional training for teachers and staff to assist in implementation.

Conclusion

As the Trump administration issues executive actions in early 2025 and continues its spending and policy reviews, the long-term impact on the SLED market remains uncertain. However, the specific areas discussed here help provide a sense of the potential scope for how these actions might affect government operations, funding, planning, budgeting and procurement. We’ll continue to monitor these developments in our ongoing reports, webinars and articles.

Check back into GovWin IQ for updates on this developing situation.

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Impacts on the Canadian public sector

In a recent article, GovWin’s senior analyst for Canada Brynn Bruder reports on possible impacts of the new Trump administration related to border issues and tariffs.

Impacts on the U.S. Federal market

The Federal Market Analysis (FMA) team is providing updates and analysis on key Trump Administration actions impacting government contractors. Learn more about their insights through the following links:

Webinars:

• Navigating the New Administration: Impacts & Opportunities Part 1
• Administration Transition 2025: Impacts and Implications for Government Contractors

Summary: First Look: Trump Administration 2.0

Articles:

• First 100 Days: Week in Review (Jan 20-24, 2025) 
• Part 2: The New Administration Takes Immediate Executive Action on Federal Technology 
• Trump Executive Orders on Immigration and Border Security
• What the Hiring Freeze means for Federal Contractors 
• The New Administration Takes Immediate Executive Action on Federal Technology 
• The Potential Impact of Executive Actions on Select Environmental and Cybersecurity Initiatives