U.S. President Donald Trump signed an executive order on Thursday challenging the growing number of state artificial intelligence laws and paving the way for a federal policy to regulate the technology. The order cited compliance challenges for businesses and the suppression of innovation as key considerations.

The executive order directs U.S. Attorney General Pam Bondi to form an AI litigation working group within the next 30 days to challenge state AI laws that "unconstitutionally regulate interstate commerce" or conflict with existing federal laws. Trump also called for a national AI policy framework that would preempt state AI laws and include provisions for child safety protections, copyright safeguards, and preventing censorship.

The executive order states: "This administration must work with Congress to ensure a minimal-burden national standard—rather than 50 separate state standards. The resulting framework must prohibit state laws that conflict with the policies set forth in this order."

According to the document, state AI laws will be evaluated under the executive order, and states found to impose excessive burdens may risk losing federal funding.

The proposal drew sharp criticism from some advocates and lawmakers, including Minnesota Democratic Senator Amy Klobuchar. She posted on social media platform X that the executive order is "dangerous and likely illegal."

Klobuchar said on X: "Trump's new executive order attempts to repeal state AI laws—whether in red or blue states—that protect Americans from harmful deepfakes, scams, and online exploitation. While Congress does nothing, we should not remove the few protections Americans have."

Trump's move aims to create obstacles for state AI laws, aligning with the interests of tech companies. In 2025, as new models, agentic tools, and applications proliferate in enterprises, tech companies have been actively resisting state regulations.

Although the executive order seeks to slow the pace of state AI regulation, Forrester Principal Analyst Alla Valente said it is unlikely to change corporate compliance strategies or AI governance approaches. Valente said: "Companies cannot back down on AI standards, assessments, controls, and governance; they must stay the course."

Arap Shah, a lawyer at Epstein Becker Green specializing in AI, privacy, cybersecurity, and health IT, noted that companies developing AI products, especially those in highly regulated industries like healthcare, know they cannot adopt new technologies without managing risks. Many companies that have already adopted compliance frameworks based on consensus standards will likely continue implementing them.

Shah said that regardless of the regulatory environment, companies will continue advancing AI development and deployment. He said: "It's a bit of a 'build first, fail fast' mindset, and investors are still pouring in money."

The pushback against state AI regulation comes as tech companies like Google, OpenAI, AWS, Microsoft, and Meta invest billions of dollars in infrastructure in the U.S. and globally. Gartner estimates global AI spending will reach $1.5 trillion in 2025.

Earlier this year, Google and OpenAI advocated for federal policies that preempt state AI laws. Meta also launched a lobbying campaign supporting candidates aligned with its AI regulatory views, marking another move by big tech against state AI regulation after a previous failed attempt to include a "10-year moratorium on state AI laws" in Trump's "One Big Beautiful Bill."

Business Impact

As the AI market expands rapidly, U.S. states including California, Colorado, Connecticut, and Texas have passed AI legislation attempting to regulate AI model developers and deployers.

Shah said responding to state AI laws is challenging for businesses because complying with different standards makes compliance tricky. Even when companies have AI guidelines and policies in place, more than two-thirds of executives admit to using unauthorized AI tools, according to research commissioned by software company Nitro.

Shah noted that many states are trying to address similar AI-related issues, such as transparency, bias, and discrimination risks. This means states are not necessarily legislating in divergent directions, but companies need time to understand the legal details. He said: "Clients developing or adopting AI are certainly aware that there are various AI laws across states, and they differ—many are still in their infancy or not even formally issued. Everyone is asking, 'What should we focus on?'"

Katy Milner, a partner at Hogan Lovells, said companies may struggle to track state developments, understand how they apply to their AI uses, and develop AI compliance programs. There are different roles in the AI value chain, from developers to deployers. Some legal frameworks apply only to developers, while others (like California's AI law) may apply to both. Milner said: "There are questions about when a deployer might be considered a developer due to how they adapt AI. Developing compliance strategies amid such active legislative activity has been challenging."

Shah believes part of Trump's policy push will target specific AI laws and penalize those deemed most burdensome, such as Colorado's. Trump specifically named Colorado's AI bill in the executive order, likely making it the first target for the AI litigation working group.

Attorneys general from New York and New Jersey have said they will oppose the presidential order's threat to state AI regulatory authority. New Jersey Attorney General Matthew Platkin said at a Leadership Conference on Civil and Human Rights press conference Thursday: "We embrace technological innovation, but no industry in American history has received the protections these AI oligarchs seek and that President Trump is clearly willing to concede."

Florida Governor Ron DeSantis also questioned the executive order's authority to preempt state AI laws. He said Congress previously did not vote on a 10-year moratorium on state AI laws and may be reluctant to advance legislation preempting state laws. An attempt this year to add a state AI law preemption provision to the National Defense Authorization Act also failed. DeSantis posted on X: "I doubt Congress has the votes to pass this bill because it is extremely unpopular with the public."

Valente said Trump may realize that passing a federal AI policy framework through Congress is difficult to achieve in the short term. The executive order says the administration will submit "legislative recommendations" to Congress to establish federal policy preempting state AI laws, but sets no specific deadline. Valente said: "This executive order is a warning to states, hoping to slow down the pace of some states enacting AI laws."