President Donald Trump just kicked off what might be the most contentious regulatory fight of his second term, and it has nothing to do with tariffs or the Federal Reserve. On Thursday, he signed an executive order that essentially declares war on state-level artificial intelligence regulations, and the response has been swift, loud, and sharply divided along predictable political lines.
One National Standard To Rule Them All
The core idea behind Trump's order is straightforward: instead of letting all 50 states create their own AI rules, the federal government should establish a single national framework. Trump argues that the current patchwork of state laws is killing innovation and handing China the advantage in the global AI race.
To make this happen, the order directs the Justice Department to create an AI Litigation Task Force. This isn't just advisory. The task force has real teeth—it's empowered to sue states whose AI laws conflict with federal policy, interfere with interstate commerce, or otherwise violate the Constitution.
Trump framed it as a matter of national competitiveness. "We cannot let 50 different regulatory regimes slow down American innovation," he said, arguing that fragmentation threatens to make the United States lose the AI race to competitors abroad.
The White House Targets "Doomer" Regulations
White House AI adviser Sriram Krishnan didn't mince words when defending the order on CNBC's Squawk Box. He described certain state AI laws as "doomer" regulations—overly pessimistic rules that assume the worst about AI and strangle innovation in the process.
"The White House is now taking a firm stance," Krishnan said, specifically calling out laws passed in states like California and Colorado. He stressed that the administration isn't going after every state regulation—rules protecting children's safety, for instance, would remain untouched. But regulations that the administration views as unnecessarily restrictive? Those are squarely in the crosshairs.
Krishnan also said the White House plans to work with Congress on federal AI legislation, though the timeline and specifics remain vague.
Democrats And Labor Groups Fire Back
If you expected Democrats to take this lying down, you haven't been paying attention to politics lately.
Sen. Amy Klobuchar of Minnesota called the order "the wrong approach—and most likely illegal," arguing that it strips away some of the few existing protections Americans have against AI-related harms. Translation: she thinks this will end up in court, and she's betting the administration loses.
Sen. Scott Wiener of California said Trump was declaring "war" on state AI transparency laws while claiming to defend U.S. dominance. Wiener pointed to the administration's recent approval of Nvidia Corp (NVDA) chip sales abroad as contradictory—if we're so worried about competitiveness, why are we helping rivals get access to cutting-edge technology?
Sen. Bernie Sanders went even further, calling the order both "unconstitutional" and "extremely dangerous." He warned that unchecked AI threatens privacy, jobs, and democracy itself. "We cannot let a handful of oligarchs decide the future of humanity," Sanders said, delivering the kind of populist punch that's become his trademark.
The AFL-CIO, the largest federation of labor unions in the country, echoed those concerns. The organization accused Trump of empowering tech billionaires at the expense of workers' rights and vowed to support any state legal challenges to the order.
Silicon Valley And Wall Street Celebrate
While Democrats and labor groups sound the alarm, Wall Street is popping champagne.
Wedbush analyst Dan Ives called the order a major win for U.S. tech companies, saying it removes "significant innovation hurdles." The move is widely expected to benefit AI heavyweights like OpenAI, Alphabet Inc. (GOOG) (GOOGL), Meta Platforms, Inc. (META), Microsoft Corp (MSFT), and Nvidia (NVDA)—all of which have spent considerable resources lobbying against state-by-state AI regulations.
These companies have argued that navigating different rules in California, Colorado, New York, and other states creates massive compliance costs and slows product development. From their perspective, Trump's order is exactly what they've been asking for.
The market seems to agree with Ives. Nvidia (NVDA), for example, ranks in the 97th percentile for growth and the 92nd percentile for quality among publicly traded companies, reflecting its dominant position in the AI infrastructure space.
What Happens Next?
The big question now is whether Trump's executive order can actually survive legal challenges. Executive orders have limits, and states have traditionally held significant power to regulate businesses operating within their borders. Expect lawsuits, probably lots of them, and expect this fight to drag on for months or even years.
In the meantime, the battle lines are clearly drawn: tech companies and their Wall Street backers on one side, state governments and progressive lawmakers on the other, with the future of AI regulation hanging in the balance.