Trump Administration Freezes $2.1 Billion in Chicago Infrastructure Funding Over Race-Based Contracting Concerns

The Trump administration has halted over $2.1 billion in federal infrastructure funding for the city of Chicago, citing concerns over what it describes as “race-based contracting practices.” The move follows a similar decision last week that saw roughly $18 billion in federal funds for infrastructure projects in New York suspended over comparable equity-related requirements.

The Chicago funding pause affects two major transit initiatives: the Red Line Extension and the Red and Purple Modernization Program, both managed by the Chicago Transit Authority (CTA). The projects are central to the city’s long-term transportation goals, particularly in underserved communities. The funding suspension was confirmed by both the U.S. Department of Transportation (USDOT) and the Office of Management and Budget (OMB), led by Director Russell Vought.

A Shift in Federal Grant Standards

On Friday, the USDOT announced a new interim rule aimed at eliminating race- and sex-based criteria in the awarding of federal contracts. The rule signals a significant departure from the diversity, equity, and inclusion (DEI) standards that many states and cities—including Chicago and New York—have implemented in recent years.

“As part of our commitment to constitutional principles, the Department of Transportation is reviewing infrastructure projects to ensure that no federal dollars are used to support discriminatory practices,” said a USDOT spokesperson. “That includes race- and sex-based preferences that violate federal law.”

Letters have been sent to the CTA, informing them that both the Red Line Extension and the Red and Purple Modernization programs are under administrative review. The reviews are intended to assess compliance with the new federal rule and determine whether any contracting practices tied to the projects breach anti-discrimination provisions.

Context and Political Implications

The move is part of a broader policy stance by the Trump administration to roll back what it characterizes as unconstitutional DEI mandates in government programs. Supporters of the move argue that public contracts should be awarded based on merit and efficiency, not racial or gender quotas.

Critics, however, contend that these DEI policies were designed to address long-standing inequalities in federal and state contracting processes. They argue that eliminating them could disadvantage minority- and women-owned businesses that have historically struggled to compete for large government projects.

In a statement, OMB Director Russell Vought defended the administration’s actions, saying, “Taxpayer dollars must be allocated based on capability and performance—not identity. Americans want these projects completed quickly and effectively, regardless of who’s doing the work.”

The USDOT added that the funding suspension is not permanent. Once the administrative reviews are complete, and if the projects are found to comply with federal guidelines, funding could resume. However, there is no timeline for the completion of these reviews.

Local Reaction and Legal Pushback

In Chicago, the decision has triggered swift political backlash. Mayor Brandon Johnson, who has prioritized equity in city planning and development, has yet to release an official statement, but city officials have indicated that legal action could be considered if funding is not restored.

“This is an unprecedented move,” said one senior city planner who spoke on background. “These projects have been in development for years, and to halt them now—over a policy change—puts hundreds of jobs and essential infrastructure at risk.”

Legal experts note that the dispute could ultimately hinge on the interpretation of constitutional equal protection laws and the authority of federal agencies to impose new contracting requirements midstream.

The Broader Debate Over DEI in Government

The suspension of infrastructure funds in both Chicago and New York is already reshaping the national conversation around diversity policies in government contracts. The Trump administration has made clear it views race- and gender-based preferences as not only inefficient but unconstitutional.

A USDOT statement on Friday laid out its position succinctly: “The American people don’t care about the race or gender of the people building the roads and transit systems—they just want the work done right and done fast.”

However, civil rights advocates argue that removing DEI requirements erases decades of progress in opening up public sector opportunities to historically marginalized groups. They fear this shift could further entrench disparities in access to federal funds and contracting opportunities.

Next Steps

The Department of Transportation has stated it will conduct its reviews as quickly as possible to determine whether any violations occurred in Chicago’s CTA projects. However, the department also noted that the current government funding stalemate in Congress—fueled by disagreements over federal spending and immigration—has limited its resources.

In a statement that appeared to shift blame toward Congressional Democrats, the USDOT said: “Until Congress passes a budget and the federal government is fully funded, our ability to complete these important reviews will be affected. We urge lawmakers to prioritize the needs of the American people over political gamesmanship.”

For now, the future of Chicago’s $2.1 billion transit projects hangs in the balance—caught between a federal crackdown on DEI policies and a local commitment to equity in public investment.