Trump moves to stop states from passing AI laws, highlighting Congress’ inability to regulate tech companies

WASHINGTON – President Donald Trump signed an executive order Thursday to stop states from regulating artificial intelligence, citing the risk of a potential patchwork of state laws holding back the United States in what AI companies describe as a race to develop technology that could surpass human intelligence.

The president’s action came after Congress twice declined to pre-empt state AI laws, most recently in a military spending bill the House passed on Wednesday without such a provision, after a bipartisan majority of state attorneys general – including Washington Democrat Nick Brown and Idaho Republican Raúl Labrador – sent a letter to congressional leaders opposing such restrictions. Trump’s move has drawn objections from both parties over concerns about unchecked corporate power, rising energy prices and the federal government infringing on states’ rights.

“There’s only going to be one winner here, and that’s probably going to be the U.S. or China,” Trump said, adding that “we have the big investment coming, but if they had to get 50 different approvals from 50 different states, you can forget it, because it’s not possible to do.”

The executive order is likely to be challenged in court, but it puts the spotlight on an uncomfortable reality: Congress has repeatedly failed to regulate tech companies, leaving Americans in a sort of technological Wild West where businesses thrive while states and individuals are left to deal with the downsides of unrestrained data collection, ubiquitous social media platforms and the booming AI industry.

The United States is the only developed country in the world that does not have a national law to govern how companies can collect and use people’s personal data – addresses, health information, internet browsing and more – making Americans among just 18% of the global population without such protections, according to the International Association of Privacy Professionals. A cottage industry of data removal companies has sprung up in the country, charging U.S. residents more than $100 a year to enforce a level of privacy that comes free of charge in most other countries.

Former Rep. Cathy McMorris Rodgers, R-Spokane, made passing a comprehensive data privacy law a top priority before she retired from Congress at the end of 2024, eventually teaming up with Sen. Maria Cantwell, D-Wash., to propose a bipartisan bill that seemed to have a real chance at passing. But amid opposition to the bill from industry lobbyists representing companies that use Americans’ data to target advertising, House Speaker Mike Johnson and House Majority Leader Steve Scalise, both Louisiana Republicans, took a highly unusual step to block the legislation.

As Punchbowl News reported at the time, the GOP leaders went behind McMorris Rodgers’ back to hold a call with Republicans on her committee the night before the panel was scheduled to consider the bill and potentially advance it to a vote in the full House, forcing her to cancel the meeting. The legislation died in committee and has not been reintroduced since McMorris Rodgers left Congress.

A related area where the United States lags behind other countries is protecting children’s safety online. Parents and tech-industry whistleblowers have long raised concerns about social media platforms and other online content threatening kids’ mental health, exposing them to abuse and exploitation, collecting sensitive personal data and using a design inspired by slot machines to keep them hooked.

A report published Wednesday by the Pew Research Center found that most U.S. teenagers use the video apps YouTube and TikTok daily, while 21% reported being on TikTok “almost constantly.” That’s despite nearly half of American teens telling Pew in an April survey that social media has a “mostly negative” impact on their peers.

The Senate voted overwhelmingly in July 2024 to pass a package of legislation called the Kids Online Safety and Privacy Act, championed by Cantwell, who then chaired the Senate Commerce Committee. A revised House version of that bill advanced out of McMorris Rodgers’ committee in September 2024, but despite bipartisan support, Johnson did not bring it to the floor for a vote, citing concerns about the bill’s impact on free speech.

Meanwhile, Australia began enforcing a ban on social media for kids under 16 on Wednesday, after the country’s Parliament passed the first-of-its-kind law in 2024. Australia also pioneered holding tech companies accountable for their impact on local news, with a 2021 law requiring the owners of Google, Facebook and other platforms that rely on ad revenue to pay news outlets for the content they publish. Two bills in Congress to address the crisis in local news – one sponsored by Cantwell and Rep. Dan Newhouse, R-Sunnyside – have repeatedly died in committee.

All of those policy debates – and the efforts by industry lobbyists to influence them – have been supercharged by the recent AI boom.

Chatbots like OpenAI’s ChatGPT have been accused of encouraging teens to harm themselves. Increasingly realistic AI-generated text, voices, images and videos make it easier for children and adults alike to be misled or exploited. And AI-driven surveillance makes data privacy concerns even more acute.

Meanwhile, Trump and his administration have enthusiastically supported the AI boom, which accounted for virtually all of the growth in the U.S. economy in the first half of 2025, according to an analysis by Harvard University economist Jason Furman. The president has struck up a close relationship with Jensen Huang, CEO of the chipmaker Nvidia, which has become the world’s most valuable company thanks to producing the advanced semiconductors that fuel the latest AI systems.

As data centers spring up across the country, driving up energy prices with their enormous demand for electricity, state legislatures have introduced hundreds of bills to regulate AI and have enacted around 100 so far this year, according to the National Conference of State Legislatures.

Rep. Michael Baumgartner, R-Spokane, introduced a bill in September that would codify an earlier version of Trump’s executive order to bar states from regulating AI. The version the president signed on Thursday had incorporated some changes, including carve-outs to allow states to pass laws related to children’s safety, data centers and states’ own procurement and use of AI tools.

In a call with reporters on Monday, Baumgartner said he generally supports states’ rights but sees AI as a domain where Congress, which has jurisdiction over interstate commerce, should set clear national standards. He warned that if Congress fails to pass nationwide regulations, national standards could effectively be set by the European Union or California, which he said “has been taken over by left-wing environmental extremists.”

“If Washington and Oregon team up with California, the size of the market is so big that if we don’t take action at the federal level, that is de facto granting the regulation of AI to California,” Baumgartner said. “Because this AI race is so important for our national security and because we don’t quite know where the innovation is going to go, I’ve talked to a lot of AI experts, a lot of folks in the tech community, both in Spokane and in Seattle, and there’s a real worry that if there were to be harsh regulations at the state level, it would really stifle the innovation in a way that would hurt our national security versus China.”

On Friday, Sriham Krishnan, senior White House adviser for AI, told CNBC that the Trump administration plans to work with Congress to craft legislation for a national AI standard.

“I would much rather have Michael Baumgartner and Donald Trump working with a bipartisan group of legislators here in Congress to create AI legislation,” Baumgartner said on Monday, “than I would to de facto outsource it to Gavin Newsom or Bob Ferguson.”

For that to happen, Trump and his allies would have to work with Democrats, who have expressed doubts about the legality of his executive order. Such legislation would need support from both parties to pass in the Senate, where the filibuster rule requires 60 votes for most bills. Republicans hold 53 seats in the upper chamber, along with a narrow majority in the House, where the controlling party can pass legislation without bipartisan support.