President Donald Trump signed a sweeping new executive order designed to dismantle state-level AI regulations in favor of a single, and significantly looser, federal standard.
The directive, signed last week, empowers the U.S. Attorney General to sue states to overturn laws that do not support "American AI dominance." It also instructs federal regulators to withhold broadband and other funding from states that maintain rules that contradict federal ones.
The administration argues that 50 separate state regulations stifle innovation and threaten our country’s competitive edge over China. But while tech investors and accelerationists are celebrating the move as a victory, legal experts and state leaders are preparing for a big showdown.
To understand the real implications of this order, I talked with SmarterX and Marketing AI Institute founder and CEO Paul Roetzer on Episode 186 of The Artificial Intelligence Show.
States Want Regulation
Thirty-eight states have adopted roughly 100 laws regarding AI this year alone, according to The New York Times.
These range from California’s requirements for safety testing on large models to South Dakota’s ban on deepfakes in political ads.
The administration, backed by influential figures like AI Czar David Sacks, views this fragmented landscape as a "startup killer." Sacks has publicly called for "One Rulebook for AI," arguing that navigating 50 different compliance regimes makes it impossible for American companies to compete globally.
However, Roetzer warns that the executive order suggests a different main goal.
The Goal is to Accelerate AI
While the order is titled "Ensuring a National Policy Framework for Artificial Intelligence," Roetzer notes that the content focuses less on building a new framework and more on tearing down existing ones.
"This executive order is not about establishing that national framework," says Roetzer. "It is about stopping regulation and accelerating AI at all costs."
The order says "excessive state regulation thwarts this imperative" of winning the AI race. It describes state laws not just as logistical hurdles, but as threats to national dominance.
To address this, the order doesn’t immediately propose a comprehensive set of federal safety rules. Instead, it establishes an "AI Litigation Task Force" within the Department of Justice. The sole purpose of this task force? To sue states.
"We're not establishing a national regulation task force. We're establishing a task force to sue states away from doing anything," explains Roetzer.
The Threat to Withhold Broadband Money
The order goes a step further by leveraging federal money. It directs agencies to evaluate whether they can withhold federal grants, specifically broadband funding, from states that enact "onerous" AI laws.
This approach is legally contentious. Critics argue that only Congress has the power to preempt state legislation in this manner. However, Roetzer points out that the legality might not be the point.
"The threat of legal action is part of how this administration functions," says Roetzer. "The threat to states to withhold funding, even if the withholding of that funding is illegal, is the playbook they have followed on many core agenda items."
By tying up states in court battles, the administration buys time for AI companies to innovate without guardrails, regardless of the final legal outcome.
An Effort to Swiftly Remove Barriers
The executive order calls for a "minimally burdensome national policy framework."
It targets laws that it claims require entities to "embed ideological bias" within models. In the context of this administration, "ideological bias" is framed as algorithms that might produce results that don't align with a specific worldview or that prioritize "equitable" outcomes over raw data outputs.
While the order includes exemptions for laws governing child safety and local infrastructure, it leaves the door wide open for the federal government to challenge almost anything else.
The problem, according to Roetzer, is that removing state laws without a robust federal replacement creates a vacuum.
"They don't have a plan for a national framework, nor do they actually intend to have a plan," says Roetzer. "Because any plan to restrict acceleration of AI would reduce in their minds their ability for AI supremacy over China."
What’s Next?
This executive order marks a significant win for the "accelerationist" camp of Silicon Valley, which believes the only risk that matters is falling behind other countries.
But it also foreshadows a chaotic period of litigation. Governors from both parties have already expressed opposition, and even some Republican political allies, such as Steve Bannon, have reportedly criticized the move.
For business leaders, this signals a potential deregulation of the AI space in the near term, but it also introduces deep uncertainty regarding which rules will actually survive the legal battles.
"The whole point of this is just to slow things down with courts," says Roetzer.
Mike Kaput
As Chief Content Officer, Mike Kaput uses content marketing, marketing strategy, and marketing technology to grow and scale traffic, leads, and revenue for Marketing AI Institute. Mike is the co-author of Marketing Artificial Intelligence: AI, Marketing and the Future of Business (Matt Holt Books, 2022). See Mike's full bio.