Trump threatens funding for states over AI regulations

U.S. President Donald Trump speaks at Mount Airy Casino Resort, Tuesday, Dec. 9, 2025, in Mount Pocono, Pa. (AP Photo/Alex Brandon)

WASHINGTON -- U.S. President Donald Trump on Thursday said he will withhold federal broadband funding from states whose laws to regulate artificial intelligence are judged by his administration to be holding back American dominance in the technology.

“We want to have one central source of approval,” Trump told reporters, flanked by top advisers, including Treasury Secretary Scott Bessent, arguing that 50 different regulatory regimes hamper the growth of the nascent industry.

“To win, United States AI companies must be free to innovate without cumbersome regulation,” the order said, adding that the current patchwork of different regulatory regimes made compliance more challenging, especially for start-ups.

Trump has embraced AI as a critical technology, working closely with U.S. companies to boost investment in a sector where China has also made great strides. But critics worry that unfettered development could leave Americans vulnerable.

The order also reflects the Trump administration’s broader attack against anti-discrimination efforts, taking aim at states such as Colorado that have sought to prevent discriminatory language from being embedded in AI models. Such efforts could result in “ideological bias” and produce false results, it said.

The order will give the Trump administration tools to push back on the most “onerous” state regulations, said White House AI adviser David Sacks. The administration will not oppose rules governing AI that relate to child safety, he added.

It directs the Secretary of Commerce to evaluate state laws for conflicts with Trump’s AI priorities and to block those states in conflict from accessing the US$42-billion Broadband Equity Access and Deployment fund.

Democratic Representative Don Beyer, who co-chairs a bipartisan caucus on AI, said the order would squelch safety reforms passed by states and create “a lawless Wild West environment for AI companies that puts Americans at risk.”

He warned that the order would reduce the likelihood of congressional action and likely violated the 10th Amendment, which says that any powers not specifically given to the federal government belong to the states or the people.

Trump’s order called for his administration to work with Congress to craft a national standard that forbids state laws which conflict with federal policy, protects children, prevents censorship, respects copyrights and protects communities.

Until such a standard was in place, the order called for actions to “check the most onerous and excessive laws emerging from the states that threaten to stymie innovation.”

Major AI players including ChatGPT maker OpenAI, Alphabet’s Google, Meta Platforms, and venture capital firm Andreessen Horowitz have said the federal government, not states, should regulate the industry.

Yet state leaders from both major political parties have said they need the power to put guardrails around AI, particularly as Congress has consistently failed to pass laws governing the tech industry.

New York state last month became the first to enact a law requiring online retailers that employ “surveillance pricing” to disclose their use of algorithms and customers’ personal data. California and lawmakers in Washington are considering bans on such methods, which are also known as “personalized pricing.”

Florida Governor Ron DeSantis, a Republican, has proposed an AI bill of rights that includes data privacy, parental controls and consumer protections. California Governor Gavin Newsom, whose state is home to several major AI companies, signed off on a bill this year requiring major AI developers to explain plans to mitigate potential catastrophic risks.

Other states have passed laws banning AI-generated non-consensual sexual imagery and unauthorized political deepfakes.

By Andrea Shalal, Jody Godoy and Courtney Rozen

(Reporting by Courtney Rozen and Andrea Shalal in Washington and Jody Godoy in New York; Additional reporting by Gram Slattery in Washington; Editing by Jamie Freed and Stephen Coates)