President Donald Trump is considering an executive order that would limit state-level artificial intelligence regulations in favor of a unified federal framework, according to a draft document obtained by The Hill.
The proposed order would direct Attorney General Pam Bondi to create a task force to challenge state AI laws deemed overly restrictive.
It would also explore withholding certain federal funds from noncompliant states and instruct the Federal Trade Commission to clarify how existing unfair-practice laws apply to AI, potentially preempting state measures.
The draft states that more than 1,000 AI-related bills have been introduced in state legislatures, warning that fragmented regulation could hinder U.S. competitiveness against adversaries like China.
A White House official told The Hill that discussion of potential executive orders remains speculative until they are officially announced.
Trump has consistently backed lighter AI regulation since forming ties with Silicon Valley leaders during his 2024 campaign.
Republicans previously tried to include a 10-year moratorium on state AI laws in the recent tax-cut package, but the provision was dropped after opposition from some conservatives.
The issue resurfaced this week when House Republican leaders considered adding a similar moratorium to the National Defense Authorization Act.
Lawmakers from both parties criticized the idea, with Sen. Josh Hawley, R-Mo., calling it evidence of money’s influence and Sen. Brian Schatz, D-Hawaii, labeling it a "poison pill."
Republican Alabama Gov. Sarah Huckabee Sanders and 19 other Republican governors urged Congress to reject preemption, citing the need to preserve state-level safeguards against AI-related child exploitation.
On Tuesday, Trump endorsed a federal standard, writing on Truth Social that the U.S. must avoid "a patchwork of 50 State Regulatory Regimes" or risk falling behind China in AI development.
The business picture surrounding AI may play a role in Trump’s decision.
A Newsmax report on Wednesday highlighted growing fears that the AI boom could unravel into a devastating bubble, reminiscent of the dot-com crash, as billions in investments chase unproven hype.
Alphabet CEO Sundar Pichai warned that no company would escape the fallout from a potential collapse, drawing parallels to the irrational exuberance of early 2000s tech mania.
Amazon founder Jeff Bezos echoed that warning, noting that investors struggle to separate viable innovations from "bad ideas" amid the frenzy.
Financial watchdogs are alarmed: The Bank of England flagged risks of a sharp market correction with broad economic spillovers, while GIC's Bryan Yeo described an "AI hype bubble" inflating early-stage startups to sky-high multiples on scant revenue.
Hedge fund icon Michael Burry has shorted Nvidia and Palantir, citing overinflated valuations and spending.
The IMF's Pierre-Olivier Gourinchas cautioned of a possible dot-com-like bust, though equity-financed and less systemic.
Despite this, UBS reports that most investors perceive the bubble but remain heavily committed.
Jim Mishler ✉
Jim Mishler, a seasoned reporter, anchor and news director, has decades of experience covering crime, politics and environmental issues.
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