Trump's AI executive order sets up a state-by-state regulatory war

The United States is about to fight a war over who gets to regulate artificial intelligence. The battlefield is the states. The weapon is the courts. And the opening salvo was fired by President Donald Trump in December 2025, when he signed an executive order directing the Department of Justice to sue states whose AI laws clash with his vision of light-touch regulation.

The order also threatens to starve states of federal broadband funding if their AI laws are deemed “onerous.” It is a blunt instrument. And it is already failing to achieve its primary goal: stopping states from passing AI laws at all.

In the weeks after the order, New York Governor Kathy Hochul signed the Responsible AI Safety and Education (RAISE) Act, a law requiring AI companies to publish safety protocols and report critical incidents. California debuted SB 53, the nation’s first frontier AI safety law aimed at preventing catastrophic harms like biological weapons or cyberattacks. Both laws were watered down from earlier versions to survive industry lobbying, but they exist. They are law. And they are direct challenges to the White House.

The executive order is not a law. It cannot preempt state legislation. What it can do is direct federal resources toward suing states, and it can condition federal funding on compliance. Cornell law professor James Grimmelmann, quoted in the MIT Technology Review piece, says the order will likely target “a smaller number of provisions, mostly relating to transparency and bias in AI, which tend to be more liberal issues.” That is a targeted strike, not a blanket ban.

But the order has already hardened positions. Brad Carson, a former Democratic congressman now building a network of pro-regulation super PACs, told MIT Technology Review that the executive order “made it harder to pass responsible AI policy by hardening a lot of positions, making it a much more partisan issue.” It created “incredible fault lines among Republicans,” he said. Republican state attorneys general have already signed a bipartisan letter urging the FCC not to supersede state AI laws.

The result is a fragmented landscape. States with large budgets and Democratic governors, like California and New York, are likely to fight the administration in court. Republican states with rural communities dependent on federal broadband funding may retreat. But the uncertainty itself is a form of regulation. It chills state lawmaking. It also chills industry investment, because no company wants to navigate 50 different AI compliance regimes.

Congress is not coming to the rescue. The Senate killed a moratorium on state AI laws in July 2025. The House scrapped a second attempt in November. The body is gridlocked and polarized. Trump’s executive order, far from clearing the path for a federal bill, has made bipartisan compromise harder.

The real action is at the state level. In 2025, state legislators introduced more than 1,000 AI bills, and nearly 40 states enacted over 100 laws, according to the National Conference of State Legislatures. That pace is accelerating. The bills fall into three broad categories: child safety, data center regulation, and frontier safety.

Child safety is the area with the most bipartisan consensus. On January 7, Google and Character Technologies settled lawsuits with families of teenagers who killed themselves after interacting with the Character.AI chatbot. The next day, the Kentucky attorney general sued Character Technologies, alleging the chatbots drove children to suicide. OpenAI and Meta face similar suits. Trump’s executive order exempts child safety laws from its proposed ban on state AI regulation. That creates a clear lane for states to act.

OpenAI has already moved into that lane. On January 9, the company inked a deal with Common Sense Media, a former critic, to back a California ballot initiative called the Parents & Kids Safe AI Act. The measure would require age verification, parental controls, and independent child-safety audits. If it passes, it could become a national template.

Data center regulation is the second front. States are introducing bills that require data centers to report power and water use, and to pay their own electricity bills. The backlash against data centers is real and bipartisan. Rural communities and environmental groups are both pushing back against the massive infrastructure buildout required to run AI.

Frontier safety is the third and most contested front. California’s SB 53 and New York’s RAISE Act are the models. They require companies to test for catastrophic risks and report safety incidents. Industry lobbying watered them down, but they are still on the books. If the Trump administration sues to block them, the legal battle will define the limits of federal executive power over state AI regulation.

Margot Kaminski, a law professor at the University of Colorado, told MIT Technology Review that the administration is “stretching itself thin with some of its attempts to effectively preempt [legislation] via executive action.” She called it “on thin ice.” The constitutional question is real: can the president use executive orders and funding conditions to effectively nullify state laws in a domain where Congress has not acted?

The answer will come from the courts. And while the legal process grinds forward, the political process is accelerating. Super PACs are pouring tens of millions into congressional and state elections. Leading the Future, backed by OpenAI president Greg Brockman and Andreessen Horowitz, will try to elect candidates who support unfettered AI development. Public First, run by Carson and former Republican congressman Chris Stewart, will back candidates who advocate for regulation. This is the crypto industry playbook, applied to AI.

The stakes are enormous. The rules written in state capitals in 2026 could determine how the most disruptive technology of the generation develops, not just in the United States but globally. If California and New York set the standard, other countries will follow. If the courts strike down state laws, the industry will operate in a regulatory vacuum until Congress acts, which may be years away.

The coming war is not just about preemption. It is about who gets to write the rules for a technology that is reshaping every industry, every labor market, and every political system. The White House wants light-touch regulation. States want guardrails. The courts will decide which vision prevails. And the rest of the world is watching.