What Trump’s Second Term Means for AI Regulation in the United States

MBHB summer associate Walter DeGroft co-authored this article.

As AI applications rapidly expand within our society, a debate has intensified over how to best regulate AI development and use. Recently, regulations relating to AI have been mainly introduced at the state and local level, with limited oversight being applied at the federal level.[1] However, under the second Trump administration, a sweeping shift toward deregulation threatens to reimagine AI law-making in the U.S.

The latest example of this shift found its way into the Big Beautiful Bill (“BBB”).[2] Though later removed,[3] the version of the BBB that passed the House contained an indicator of a major federal policy shift relating to AI: a moratorium on state and local regulation of AI.[4] Specifically, Section 43201(c) proposed to prohibit the enforcement by any “State or political subdivision thereof” of “any law or regulation of that State or a political subdivision thereof limiting, restricting, or otherwise regulating artificial intelligence models, artificial intelligence systems, or automated decision systems entered into interstate commerce.”[5] The prohibition would have lasted 10 years from the passage of the BBB.[6] In an effort to push this moratorium through the Senate, Senator Ted Cruz (R-TX) along with Senator Marsha Blackburn (R-TN) proposed to limit the moratorium to five years and linked acceptance of the moratorium to access to “$500 million in AI Infrastructure funding.”[7]

The scope of the original AI moratorium was considerable. For example, within the proposed legislation, the term “artificial intelligence model” was broadly defined as “a software component of an information system that implements artificial intelligence technology and uses computational, statistical, or machine-learning techniques to produce outputs from a defined set of inputs.”[8] This definition covers nearly all AI applications including ChatGPT, Google Maps, and (arguably) the weather app on an iPhone. As a result, a moratorium on state and local regulation of anything involving an “artificial intelligence model” would have had sweeping implications across a wide range of industries.

Though the AI regulatory ban was removed from the final version of the BBB, Rep. Brett Guthrie (R-KY) has said that Congress “will continue to work on establishing a federal framework for AI policy and stop ‘50 other standards’ in the states.”[9] Further, members of the House had pledged to revive the measure before the BBB wound up on President Trump’s desk.[10] This all indicates an interest by at least some members of Congress in eliminating the ability for state and local authorities to craft their own controls over AI.

The push to remove regulatory guiderails relating to the adoption and use of AI appears to align with pro-AI directives from the second Trump administration. A recent series of memoranda from the Executive Branch instructed federal agencies to “remove unnecessary and bureaucratic requirements that inhibit innovation and responsible adoption”[11] of AI and to use “safe and secure artificial intelligence (AI) in innovative ways to improve government efficiency and mission effectiveness.”[12] This policy position, coupled with the nearly $1.5 billion currently earmarked for defense spending on AI applications,[13] will position the federal government as a major facilitator of AI development.

Additionally, one of Trump’s first executive orders was revoking Biden’s “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence” executive order.[14], [15] By revoking this executive order, government entities developing AI models are no longer required to conduct internal hacking simulations (“red-teaming”) on their AI models,[16] and private companies working in tandem with the government are exempt from regularly reporting physical or cybersecurity threats.[17] The exchange of safety measures for efficient innovation represents a further step in removing the federal oversight of AI development.[18]

A final example of the second Trump administration’s regulatory stance is the termination of the Director of the US Copyright Office and Librarian of Congress.[19]  Allegedly, these terminations stem from a report by the Copyright Office describing how the training and use of AI could fall outside the protection of the fair use defense in copyright law,[20], [21] a question that the federal courts are currently grappling with.[22] The removal of these director-level administrators reflects the Executive Branch’s broader efforts to sidestep legal and regulatory barriers, such as those in the Copyright Act,[23] that could hinder the development of AI.

The second Trump administration’s deregulatory agenda contrasts sharply with actions undertaken by state and local governments. In 2024 alone, legislators in all 50 states, Puerto Rico, U.S. Virgin Islands, and the District of Columbia proposed almost 500 bills broadly directed to some aspect of AI.[24] This surge in state-level action highlights the growing concern over AI’s integration into daily life.

With these actions by the Executive Branch and calls to revisit some version of the AI moratorium in Congress, the question is whether we will see another push for federal regulation or whether states will continue to produce their own legislation.[25] On one hand, if states are to be considered the “laboratories of democracy,” an AI moratorium hamstrings the development of novel and potentially useful guardrails for the use and application of AI. On the other hand, the pro-AI stance of members of Congress and the second Trump administration together raise the question of whether a unified, national-focused approach might be the most effective way to address the complexity and scale of AI technologies. While such an approach may stifle local efforts to ensure more tailored, region-specific protections, it could also create a unified regulatory framework capable of overseeing technology that often operates across state lines — indeed within a global AI ecosystem. Such a centralized framework may be necessary for a technology as powerful as AI and one that inherently invokes interstate — and international — relations and commerce.[26] However, as the present administration seeks to more forcefully assert pro-AI directives and deregulatory measures, Congress and the courts will be tasked to determine the lawful and proper balance between fostering high-tech innovation and safeguarding citizens from the potential risks of this transformative technology.

[1] Aaron V. Gin & Yuri Levin‑Schwartz, Mapping the Future: The Rise of State‑Level AI Regulation in the United States, McDonnell Boehnen Hulbert & Berghoff LLP (Feb. 29, 2024), https://www.mbhb.com/intelligence/snippets/mapping-the-future-the-rise-of-state-level-ai-regulation-in-the-united-states/.

[2] One Big Beautiful Bill Act, H.R. 1, 119th Cong. § 43201 (2025).

[3] U.S. Senate Comm. on Commerce, Sci. & Tr., Senate Strikes AI Moratorium from Budget Reconciliation Bill in Overwhelming 99–1 Vote (July 1, 2025), https://www.commerce.senate.gov/2025/7/senate-strikes-ai-moratorium-from-budget-reconciliation-bill-in-overwhelming-99-1-vote/8415a728-fd1d-4269-98ac-101d1d0c71e0.

[4] One Big Beautiful Bill Act, supra note 1, at § 43201(c).

[5] Id.

[6] Id. 

[7] Anthony Adragna, Love It or Hate It, the AI Moratorium Will Be Back, Politico Digital Future Daily (July 2, 2025), https://www.politico.com/newsletters/digital-future-daily/2025/07/02/love-it-or-hate-it-the-ai-moratorium-will-be-back-00437716.

[8] One Big Beautiful Bill Act, supra note 1, at § 43201(d)(2).

[9] Diego Areas Munhoz & Ben Brody, Guthrie Will Keep Fighting for AI Freeze, Punchbowl News (July 3, 2025), https://punchbowl.news/article/tech/guthrie-ai-freeze-fight/#:~:text=House%20Energy%20and%20Commerce%20Committee,AI%20standard%20on%20the%20books.

[10] Id.

[11] Russell T. Vought, Memorandum for the Heads of Executive Departments and Agencies: Accelerating Federal Use of AI through Innovation, Governance, and Public Trust, Office of Management and Budget, Exec. Office of the President, at 1 (April 3, 2025), https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-21-Accelerating-Federal-Use-of-AI-through-Innovation-Governance-and-Public-Trust.pdf.

[12] Russell T. Vought, Memorandum for the Heads of Executive Departments and Agencies: Driving Efficient Acquisition of Artificial Intelligence in Government, Office of Mgmt. & Budget, Exec. Office of the President, at 1 (Apr. 3, 2025), https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-22-Driving-Efficient-Acquisition-of-Artificial-Intelligence-in-Government.pdf.

[13] One Big Beautiful Bill Act, supra note 1, at §§ 20002, 20005, 20006.

[14] Executive Order No. 14179, Removing Barriers to American Leadership in Artificial Intelligence, 90 Fed. Reg. 8741 (Jan. 31, 2025), issued Jan. 23, 2025.

[15] Executive Order No. 14110, Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, 88 Fed. Reg. 75,191 (Nov. 1, 2023), issued Oct. 30, 2023.

[16] Executive Order No. 14110, supra note 15 at § 4.1.

[17] Id. at § 4.2.

[18] Removing Barriers to American Leadership in Artificial Intelligence supra note 10.

[19] Matt O’Brien, Trump Administration Fires Top Copyright Official Days After Firing Librarian of Congress, AP News (May 11, 2025), https://apnews.com/article/copyright-director-firing-government-trump-7ab99992a96131bce7de853b66feec68.

[20] Id.

[21] U.S. Copyright Office, Copyright and Artificial Intelligence, Part 3: Generative AI Training Report (Pre‑Publication Version) (Jan. 2025), https://www.copyright.gov/ai/Copyright-and-Artificial-Intelligence-Part-3-Generative-AI-Training-Report-Pre-Publication-Version.pdf.

[22]See, e.g., Thomson Reuters Enter. Ctr. GmbH v. Ross Intel. Inc., 765 F. Supp. 3d 382 (D. Del. 2025).

[23] Copyright Act, 17 U.S.C. §§ 101–810 (2024).

[24] National Conference of State Legislatures, Artificial Intelligence 2024 Legislation, NCSL (Jan. 21, 2025), https://www.ncsl.org/technology-and-communication/artificial-intelligence-2024-legislation.

[25] Sen. Ted Crus has said that he will include a 10-year AI Moratorium in his own state and local legislation.  See Anthony Adragna, “Ted Cruz Says His AI Bill Will Have a Moratorium on State Regulations,” Politico Pro (May 15, 2025), https://subscriber.politicopro.com/article/2025/05/cruz-says-his-ai-bill-will-have-a-moratorium-on-state-regulations-00352569.

[26] See, e.g., Matt O’Brien, OpenAI Looks Across US for Sites to Build Its Trump‑Backed Stargate AI Data Centers, AP News (Feb. 6, 2025), https://www.apnews.com/article/openai-stargate-artificial-intelligence-chatgpt-4fc80ae87304c99a5189c05ca967e0d2.