President Donald Trump signs a sweeping new executive Order Designed to eliminate state-level AI regulations in favor of a single and fairly loose federal standard.
The directive, signed last week, gives the US attorney general the authority to prosecute states that do not support “US AI dominance.” It also directs federal regulators to withhold broadband and other funding from states that maintain rules that contradict federal rules.
The administration argues that 50 different state regulations stifle innovation and threaten our country’s competitive edge over China. But while tech investors and bullies are celebrating the move as a victory, legal experts and state leaders are preparing for a bigger showdown.
To understand the real implications of this order, I spoke to Paul Roetzer, founder and CEO of SmarterX and the Marketing AI Institute. Episode 186 of the Artificial Intelligence Show.
want state regulation
Thirty-eight states have adopted nearly 100 laws regarding AI this year alone, according to the new York Times,
These range from California’s requirements for security testing on large models to South Dakota’s ban on deepfakes in political ads.
The administration, backed by influential figures like AI czar David Sachs, sees this fragmented landscape as a “startup killer.” Sacks has publicly demanded “A rule book for AI,” Arguing that navigating 50 different compliance regimes makes it impossible for American companies to compete globally.
However, Roetzer cautions that the executive order suggests a different main goal.
The goal is to accelerate AI
While the title of the order is “Ensuring a national policy framework for Artificial Intelligence”, Roetzer says the content focuses less on building a new framework and more on dismantling existing ones.
“This executive order is not about establishing that national framework,” Roetzer says. “This is about preventing regulation and accelerating AI at all costs.”
The order states that “excessive state regulation thwarts this imperative to win the AI race”. It describes state laws not just as logistical constraints, but as threats to national sovereignty.
To address this, the order does not immediately propose a comprehensive set of federal security rules. Instead, it establishes an “AI Litigation Task Force” within the Justice Department. The sole purpose of this task force? Suing the states.
Roetzer explains, “We’re not setting up a national regulation task force. We’re setting up a task force to sue states that stop us from doing anything.”
Threat to stop broadband money
The order goes a step further by taking advantage of federal funding. It directs agencies to evaluate whether they can withhold federal grants, particularly broadband funding, from states that enact “tough” AI laws.
This approach is legally controversial. Critics argue that only Congress has the power to block state legislation in this manner. However, Roetzer points out that legality may not be the issue.
“The threat of legal action is part of the way this administration operates,” Roetzer says. “The threat of withholding funding to states, even if it is illegal to withhold that funding, has deterred them from following through on many key agenda items.”
By tying states to a court battle, the administration gives AI companies time to innovate without hindrances, regardless of the ultimate legal outcome.
Attempt to overcome obstacles quickly
The executive order calls for the “least burdensome national policy framework.”
It targets laws that it claims require institutions to “install ideological bias” within models. In the context of this administration, “ideological bias” has been framed as algorithms that may produce results that do not 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 open for the federal government to challenge almost anything it does.
The problem, according to Roetzer, is that removing state laws without a strong federal replacement creates a void.
“They don’t have a plan for a national framework, nor do they really intend to have one,” Roetzer says. “Because any plan to restrict the acceleration of AI will in their minds reduce their ability to exert AI dominance over China.”
What will happen next?
The executive order marks a significant victory for Silicon Valley’s “accelerationist” camp, which believes the only risk is falling behind other countries.
But it also foreshadows a chaotic period of litigation. Governors of both parties have already expressed opposition, and even some Republican political allies like Steve Bannon have reportedly criticized the move.
For business leaders, this signals potential regulation of the AI sector in the near term, but it also introduces deep uncertainty about which rules will actually survive legal battles.
“The whole purpose of this is to slow things down with the courts,” Roetzer says.
