"Loosening the reins" for AI giants! Trump signs executive order limiting state regulatory power, pushing for federal "single rule"

The President of the United States, Donald Trump, signed an executive order on Thursday evening local time aimed at limiting the ability of states to regulate artificial intelligence (AI) and attempting to block certain existing state laws. According to the text released on the White House website, the executive order aims to "maintain and enhance the United States' leadership position in the global AI field through a minimally burdensome national AI policy framework". During the signing ceremony in the Oval Office, Trump stated that AI companies "want to be in the United States, they want to develop here, we have a lot of investments coming. But if they have to get approval from 50 states separately, then you can forget about it". The executive order directs Attorney General Pam Bondi to establish an "AI Litigation Task Force" within 30 days, whose "sole responsibility will be to challenge state AI laws that conflict with the Trump administration's light regulatory vision". Furthermore, the executive order also instructs Commerce Secretary Howard Lutnick to identify clauses in existing state laws that "require AI models to alter their true outputs", echoing the Trump administration's earlier efforts to prevent so-called "woke AI". States identified as having these and other "burdensome" requirements may need to sign agreements promising not to enforce these regulations in order to receive federal funds that can be used freely. The executive order also directs White House AI Director David Sachs and Director of the White House Office of Science and Technology Policy Michael Krajcio to propose a federal law that prioritizes or supersedes state AI regulations. According to the executive order, these proposals will not affect areas where federal standards have not been established, such as child safety protection, data center infrastructure, and state government procurement of AI. The executive order comes after Congress failed to pass a similar policy in late November. House Republicans had previously attempted to include a provision in the required "National Defense Authorization Act" stating that only the federal government can legislate AI regulation. However, the measure met strong opposition and the relevant content was ultimately removed. It is worth mentioning that Trump had previewed the executive order earlier this week. Trump stated on social media on Monday local time that he would be issuing a "ONE RULE" executive order. He emphasized, "If we are to continue to lead in the field of AI, we must have only one set of rules." Trump explicitly stated that companies should not be forced to obtain approvals from 50 states individually every time they conduct business, implying that the current state regulatory system places a heavy burden on businesses. Shortly after Trump's post, Sachs further explained the rationale behind the executive order on X platform. Sachs believes that this falls within the realm of "interstate commerce" and that the founding fathers intended to leave such economic activities under federal government regulation. During the signing ceremony in the Oval Office on Thursday, Sachs stated, "We have 50 states running in 50 different directions. It makes no sense at all." "We are creating a chaotic and patchwork regulatory system, and what we need is a single federal standard, which is what the executive order requires." Opposition However, given the slow and inconsistent progress at the federal level in advancing AI regulation, critics of the executive order believe that it is essentially an attempt to prevent any meaningful AI regulation and have little hope that Congress can truly replace existing state laws with national standards. Brad Carson, leader of the bipartisan AI advocacy group "Responsible Innovators for America" and former congressman, stated that this executive order is once again trying to push through "unpopular and unwise" policies. He stated, "The tech giants have twice failed to force through an AI amnesty policy in legislation," and predicted that this executive order would soon be blocked in court. Mackenzie Arnold, Director of US Policy at the Artificial Intelligence Law Institute, stated on Wednesday that it is crucial to understand the government's logic in this context. She noted that under the same logic, states would not be allowed to pass product safety laws virtually all of which would impact companies operating and selling products nationwide. However, these laws are typical examples of acceptable state legislation. Regulation around AI has quickly become a controversial political issue. From pollution, soaring electricity prices, noise from data centers, to AI chatbots that may exacerbate mental health issues in adolescents, many Americans regardless of their political stance are beginning to call for effective AI laws. Many supporters of MAGA see the current wave of AI as a loss of control over corporate power, with a few powerful AI companies and their CEOs almost becoming a de facto oligopoly. Steve Bannon, who served as chief strategist for Trump during his first term, stated on Wednesday that if "we are at a critical juncture similar to a 'Sputnik moment,' but cannot regulate the cutting-edge labs," then "it's meaningless." He said, "You face much more regulation opening a nail salon on Capitol Hill than at those cutting-edge labs. We have no idea what they are doing." Republican Senator Josh Hawley of Missouri also opposed the proposal to ban states from enacting AI regulations, seeing it as a giveaway to tech companies that will weaken states' ability to set up consumer protection "guardrails" and regulate AI risks. Politicians at the other end of the political spectrum also hold a skeptical view. Democratic Senator Ed Markey of Massachusetts stated in a statement that Trump's executive order is "an early Christmas gift to billionaire CEO friends". Markey called the executive order "irresponsible, short-sighted, and undermines states' ability to protect their constituents". Silicon Valley Support For years, Republicans have been advocating for federal priority in AI legislation, limiting states' ability to enact AI regulations. This advocacy has accelerated in the past 18 months as Democratic-led states like Colorado, California, and New York have enacted laws restricting tech companies. Tech figures close to Trump, including Huang Renxun, Sachs, and venture capitalist Marc Andreessen, all firmly argue against states enacting different regulations, with Andreessen's venture capital firm funding a political action committee network focused on AI to counter strict regulatory laws. Earlier this summer, Sachs and other officials pushed for a provision in Trump's tax and spending legislation to freeze state AI regulations for ten years. This provision essentially stipulated that states would not be eligible for federal funds for expanding network infrastructure if they enacted AI regulations. However, the provision did not pass due to opposition from Bannon and other critics flooding congressional offices with calls. Trump did not publicly support the measure at the time, and Vice President Pence's office chief of staff also opposed it, leading to a blurry White House stance. This issue came to the forefront again at the end of September. California Governor Gavin Newsom signed an AI bill that imposed restrictive regulations on tech companies developing top models. Trump then urged Congress to either include a provision in the military spending bill to prohibit states from enacting related rules or to establish federal priority in AI legislation through separate legislation. Despite receiving public support from Trump, this effort was thwarted by opposition from Democrats and many Republicans. Many lawmakers noted that restricting measures against states were not reasonable unless there were existing or pending federal laws on the subject. It is reported that NVIDIA Corporation CEO Huang Renxun delivered a stark message to Trump during a meeting in the Oval Office in November - the disparate legislation on AI in states like California poses a threat to America's technological development. According to insiders, Huang Renxun pointed out at the meeting that the various legislation in states could lead to America losing the AI competition. Sachs and senior AI policy advisor Srilam Krishnan also expressed similar views during the discussion. Both have close ties to Silicon Valley. Insiders stated that Trump immediately told the attendees and Chief of Staff Susie Wiles that the government should address this issue through an executive order. Shortly after the meeting ended, Trump posted on social media, stating that the United States must avoid a series of disjointed AI regulations established by individual states. While the executive order signed on Thursday may bring a temporary victory for tech companies, analysts warn that it will face legal challenges. Furthermore, punishing states is not a solution to the deeper issues of establishing federal rules. Dean Baugh, Senior Research Fellow at the American Innovation Foundation think tank and former White House AI policy advisor, stated, "This executive order clearly demonstrates the current administration's firm commitment to establishing a federal AI governance framework. The question now is how this framework will be built." Trump's AI Policy Landscape Taking Shape The executive order signed by Trump on Thursday is not his first major move in the AI field. Shortly after returning to the White House in January 2025, Trump signed Executive Order No. 14179, abolishing much of the Biden administration's AI safety regulations and declaring his intention to "remove obstacles to American AI leadership". In July, the White House released a 25-page "American AI Action Plan," proposing nearly a hundred federal actions to relax regulations, increase investment in infrastructure, and ensure that the United States maintains a leading position in global AI competition. In September, Trump also signed an executive order specifically targeting AI applications for childhood cancer, further demonstrating his determination to apply AI technology. Just last month, Trump signed an executive order officially launching the national AI research program called the "Create Century Intelligent Equipment Group Corporation Plan", vowing to double the productivity and influence of American scientific innovation in 10 years. The White House even compared this plan to the Manhattan Project during World War II and the Apollo moon landing project during the Cold War, calling it the largest mobilization of federal scientific resources since the Apollo program. The White House stated that the plan aims to completely reshape the scientific research paradigm in the United States and establish its absolute leadership position in the global AI field. According to the deployment of the executive order launching the "Create Century Intelligent Equipment Group Corporation Plan", a detailed list containing at least 20 important national scientific and technological challenges will be clarified within 60 days. NVIDIA Corporation and Dell Technologies, Inc. may be deeply involved, with the reorganized U.S. Energy Corp. Department taking the lead in execution. The latest executive order aims to establish a unified federal regulatory framework, end the current situation of disparate state legislation, and directly impact the compliance costs and expansion speed of tech companies in the AI field. If Trump administration's AI-related policies, including this executive order, are successfully implemented, it may further promote the AI trend and alleviate concerns in the market about the bursting of the AI bubble to some extent. This is undoubtedly good news for a range of AI-related stocks, including NVIDIA Corporation, Alphabet Inc. Class C, and Dell Technologies, Inc. Amid the recent speculation about an AI bubble, the third-quarter earnings report from NVIDIA Corporation, as well as the rebuttal to the AI bubble theory by many Wall Street banks, along with the launch of Gemini 3 by Alphabet Inc. Class C, have mitigated concerns about the AI bubble bursting. In the view of optimists, the pullback in AI-related stocks is a healthy adjustment before further growth.