Trump Takes Aim at State Regulation of AI

• By: Wes Bissett
• December 18, 2025

President Donald Trump issued an executive order last Thursday that seeks to restrict the ability of states to regulate artificial intelligence (AI). This action is the latest salvo in the increasingly contentious debate about whether and how best to regulate this quickly evolving technology. 

The order is consistent with the Trump administration’s efforts to reduce regulatory compliance burdens and costs for AI developers and users; avoid a patchwork of potentially inconsistent state laws; and ultimately establish a uniform and minimally restrictive regulatory framework for AI.

The order includes the following elements: 

1) AI Litigation Task Force. The order directs the attorney general to establish an “AI Litigation Task Force” that would initiate legal challenges against state laws deemed to be “inconsistent” with the Trump administration’s goal of encouraging innovation while maintaining a “minimally burdensome national policy framework for AI.”

State requirements in the crosshairs would include those believed to unconstitutionally regulate interstate commerce or otherwise conflict with federal law.

2) Evaluation of state AI laws. The executive order instructs the U.S. Department of Commerce to review existing state AI laws and identify those that are deemed to be onerous or in conflict with the administration’s AI objectives. The department is specifically directed to identify laws that “require AI models to alter their truthful outputs” or that require AI developers and users to provide disclosures or reports that violate the First Amendment or other provisions of the Constitution.  

3) Restrictions on federal funding to states. The statement also directs the Department of Commerce to withhold federal broadband funding to any state with an AI law that is deemed objectionable by the department’s evaluation process.

Other federal departments and agencies that administer discretionary grant programs are also directed to explore whether they can similarly withhold funds from states that have AI laws deemed to be inconsistent with the order. 

4) Use of existing Federal Trade Commission (FTC) authority. The executive order requires the FTC to issue a policy statement that outlines when existing prohibitions against unfair and deceptive acts or practices can be used to invalidate state laws that “require alterations to the truthful outputs of AI models.”

5) Federal legislative recommendations. The order instructs White House officials to develop legislative proposals that, if enacted, would establish a uniform federal policy framework for AI that preempts state laws that conflict with the policy goals outlined in the executive order. 

This executive order is not the first attempt by the Trump administration to tie the hands of the states when it comes to AI regulation. Efforts to pass a 10-year moratorium on state AI laws have been rebuffed by Congress and criticized by a bipartisan universe of governors, state attorneys general and other state and local officials. 

The real-world impact of last week’s executive order is unclear and will take time to discern. While it seems likely that the U.S. Department of Justice (DOJ) will target at least some of the more controversial state AI laws and attempt to overturn those statutes in court, the outcome of any such challenge is unlikely to be altered by last week’s order. 

While the enactment of a statutory moratorium would have truly opened the door to preemption of state AI laws, the effect of this executive order is different and much narrower. The order, unlike a statute enacted by Congress and signed into law, does not empower the DOJ in new ways, invalidate state laws or make state requirements more susceptible to legal challenge. 

It is also impossible to predict what effect the executive order will have on the consideration of state AI legislation in 2026 and beyond. Some observers have suggested the executive order could have a chilling effect on state policymakers, but it is perhaps just as likely that state officials in some jurisdictions will be spurred to act in the wake of the administration’s challenge to state authority.

Wes Bissett is Big “I” government affairs senior counsel.