AI Innovation: White House Executive Order Champions Free-Market Approach

On January 23, 2025, President Donald Trump signed an Executive Order (EO) aimed at strengthening America's leadership in artificial intelligence (AI). The order, called "Removing Barriers to American Leadership in Artificial Intelligence," is designed to sustain the U.S.'s global dominance in AI while ensuring that AI systems are free from ideological bias or social agendas. The White House plans to develop an "AI Action Plan" within six months, focusing on advancing human flourishing, economic competitiveness, and national security.

This EO comes after Trump’s administration repealed President Biden's 2023 EO, which focused on the safe, secure, and trustworthy development of AI, addressing issues like privacy, civil rights, and workers’ rights. The repeal was part of a broader effort to rescind 78 policies from the previous administration.

While the full direction of the new AI policy is still developing, one outcome may be an increase in state-level regulations and litigation to fill the policy gap. In anticipation of Trump’s more pro-innovation stance, California and New York have already taken steps to regulate AI, with California issuing legal advisories and New York requiring AI disclosure in layoffs. Texas is also considering its own AI regulation bill, the Texas Responsible AI Governance Act.

The new EO emphasizes driving AI innovation through free markets, top-tier research institutions, and entrepreneurship. It criticizes the Biden administration’s approach, calling it "dangerous" and claiming it stifles innovation. The EO also outlines the development of an AI Action Plan to ensure that the U.S. maintains its AI leadership, including steps taken in the previous Trump administration like doubling AI research investment and establishing national AI research institutes.

Part of the new direction involves revoking the Biden EO’s policies, with a review of all related actions led by key officials. Within 60 days, the Director of the Office of Management and Budget will revise existing memoranda to align them with the new policy.

With the federal government shifting away from a unified approach, state-level regulation may increase. States like Colorado and Texas have already introduced AI-related legislation, and others may follow suit. This could lead to a patchwork of state laws, as businesses seek clarity in the absence of a federal framework.

As this shift unfolds, the Trump administration’s EO may spark further regulatory developments at the state level, possibly leading to more comprehensive policies as states look to address AI's potential risks and impact.