Thursday Evening White House with AI and Crypto Emperor David Sachs looking over his shoulderDonald Trump signed an executive order Its goal is for the federal government to gain unilateral power to regulate artificial intelligence. The order itself cannot unilaterally eliminate state AI laws, but it directs federal agencies to take steps to reduce or eliminate their impact, and discourages states from passing laws that the federal government could challenge, or risk critical funding for other programs.
It specifically calls out Colorado Recently consumer protection law passedClaiming that “Banning ‘algorithmic discrimination’ could also force AI models to produce inaccurate results to avoid ‘differential treatment or impact’ on protected groups.”
The final order is largely similar to the draft copy that we obtained and reported on last month. It directs the creation of an “AI Litigation Task Force” that the Attorney General will direct, suing states over any AI laws they determine are inconsistent with the goal of “maintaining and enhancing the United States’ global AI dominance through a minimally burdensome national policy framework for AI.”
The FTC is directed to issue a policy statement explaining that “circumstances in which state laws require changes to the true output of AI models are exempt from the Federal Trade Commission Act’s prohibition on engaging in deceptive acts or practices that affect commerce.”
It also directs Commerce Secretary Howard Lutnick to issue a report within the next 90 days on states whose laws are deemed contrary to the order, and determine which states may be ineligible for rural broadband funding from the Broadband Equity Access and Deployment (BEAD) program. Meanwhile, FCC Chairman Brandon Carr has been tasked with “working on proceedings to adopt a federal reporting and disclosure standard for AI models that circumvents conflicting state laws.”
Section 8 of the order contains a notable, and vague, carve-out, claiming that its recommendations do not propose to preempt “otherwise valid state AI laws” covering child protection, creation of AI computation and data infrastructure, use of AI by state governments, and “other subjects to be determined.”
In the past year alone, a growing pile of bills introduced and passed by state governments across the country have attempted to put guardrails on artificial intelligence — a patchwork of laws that, as Trump framed it, the AI industry claims make it extremely difficult to operate and innovate. In an ideal situation, Congress would handle this confusing patchwork by passing AI regulatory laws at the federal level, which would then preempt, or automatically override, any conflicting state laws.
However, the approach he has taken has proven controversial. Citing the slow pace of Congress and the speed at which they need to advance innovation, the AI industry and their political allies have sought to ban, or ban, states from writing or enacting their own AI laws. In the past year alone, Congress has attempted to pass a moratorium twice, and failed both times — first during debate over Trump’s Big Beautiful bill, where it died in the Senate, and then National Defense Authorization Act failed during negotiationsWhich determines the annual defense expenditure.
But while Congress’s moratorium efforts were criticized, it would have been constitutional had it been signed. However, the White House is under suspicion. Several weeks ago, a draft executive order was leaked detailing how the Trump administration would approach the exemptions: Instead of trying to put guardrails on AI, they would try to punish states with “tougher” laws that were contrary to the White House’s wishes.
Policy watchers and political insiders noted that the draft order would have given an inordinate amount of power to billionaire venture capitalist David Sachs, who serves as the White House AI and crypto czar, while sidelining key federal agencies and offices typically involved in setting tech policy. Although she’s technically a temporary government employee, Sachs serves as a direct conduit between the president and Silicon Valley’s elite, and she has gained an enormous amount of influence over Trump’s tech policy — so much so that Trump’s statements on AI, H1B visas, and chip sales have horrified the MAGA base.
However, in the past few weeks, Trump has begun to signal his willingness to sign an executive order that would overrule state laws. On Monday, he said on Truth Social that the order would, in theory, create “just one rulebook” so that AI companies don’t have to follow “50 states, many of which are bad actors, involved in the regulations and approval process. There can be no doubt about that! AI will be destroyed in its infancy!”.
