Trump Administration Navigates AI Policy Rift as Tech Influence Grows
The Trump administration is grappling with internal divisions over artificial intelligence policy, as President Trump signed an executive order limiting states’ power to regulate the burgeoning technology. This move, finalized last week, caps weeks of debate that exposed a growing rift between populist forces within the Republican Party and the increasing influence of Silicon Valley allies over the president’s agenda.
The debate centers on the balance between fostering innovation and addressing concerns about the potential societal impacts of AI, particularly job automation and data security. A draft of the executive order leaked last month ignited opposition from within the GOP, with some arguing that fears over job displacement would undermine the party’s appeal to working-class voters. However, a concerted effort by tech leaders successfully swayed the president, convincing him that overly burdensome regulations could stifle the industry’s growth.
The episode underscores a broader power struggle unfolding within the administration as officials confront high-stakes decisions impacting national security, employment, and online safety. According to more than a dozen White House officials and individuals familiar with the administration’s AI policies, the debate has been conducted largely behind closed doors, with many speaking anonymously to detail private conversations.
This tension reflects a simmering discord between populists and technology businessmen who contributed to Trump’s rise to power – a dynamic that was more prevalent during his first term but had largely subsided until recently. The executive order represents the second significant victory in a week for Trump’s influential and affluent tech allies.
On Monday, Trump announced he would permit Nvidia to export H200 chips to China, a decision that drew criticism from China hard-liners who warned it could accelerate the development of AI capabilities by a foreign competitor. The move also unsettled some longtime supporters of the “Make America Great Again” (MAGA) movement, already apprehensive about the president’s plans to expand high-skilled immigration at the behest of tech leaders seeking foreign talent. This division, with midterm elections less than a year away, could potentially strain the unusual coalition that propelled Trump to the White House in 2024.
Earlier this summer, some Republicans successfully blocked a congressional effort to implement a 10-year moratorium on state AI laws, preparing for a fight when the draft executive order – intended to prevent a patchwork of regulations – was leaked.
As Trump signaled his support for limiting states’ regulatory authority, some White House staff expressed frustration with the approach taken by Trump’s AI czar, David Sacks, and AI advisor, Sriram Krishnan, both well-known Silicon Valley investors. Outside groups submitted alternative executive orders to key White House offices, creating confusion among lobbyists and activists unsure of which version was under consideration.
The draft proposed by Sacks included the creation of a legal task force to challenge state laws inconsistent with the administration’s goal of maintaining global dominance in AI. This sparked concerns among conservatives and AI safety advocates that the administration might challenge state laws designed to protect children online or regulate data centers due to rising energy costs. Alternative proposals focused on narrowly challenging state laws that conservatives feared could lead to “woke AI.”
Governors, members of Congress, and conservative advocacy groups voiced their concerns directly to the White House. Publicly, Florida Governor Ron DeSantis (R) and conservative commentator Stephen K. Bannon criticized the order on X and in podcasts.
“All of this is viewed as a family intervention of people who actually love the president,” said one individual opposed to the order, speaking on the condition of anonymity.
This person noted that many within the GOP base are struggling with the president’s alignment with tech leaders who have generously contributed to his political operations and White House ballroom project, contrasting it with his earlier campaign persona of connecting with everyday Americans. “It feels like millions of votes across the country just got traded for thousands of [venture capitalist] and tech rich votes in regions Republicans will never win.”
White House spokesman Kush Desai stated that Trump is focused on ensuring America delivers “cutting-edge technologies of the future – without compromising on our national security.” “While the president regularly interacts with business and tech leaders toward this end, the only special interest guiding his ultimate decision-making is the best interest of the American people,” Desai added.
To address these concerns, Sacks and Krishnan actively engaged with GOP leaders, assuring lobbyists, governors, and their staff that the proposal was not an attack on states’ rights. During a recent call with Republican state executives, including Arkansas Governor Sarah Huckabee Sanders, who had previously opposed efforts in Congress to preempt state AI laws, Sacks explained that the effort would avoid a confusing patchwork of differing state AI laws. He also raised concerns about existing laws in blue states, specifically a Colorado law requiring developers to protect against algorithmic bias in AI-driven decisions related to hiring, housing, and loans.
Sacks and Krishnan also met with Mike Davis, a conservative political activist who wrote a Fox News op-ed warning against “Big Tech’s AI amnesty scam.” Trump spoke by phone with Senator Marsha Blackburn (R-Tennessee), who withdrew her support for a 10-year moratorium on state AI laws within Trump’s “One Big Beautiful Bill.” Blackburn, representing a state with a significant music industry, has expressed concerns about the impact of AI systems on musicians and copyrighted music. Additionally, Krishnan received feedback from Senator Maria Cantwell (Washington), the top Democrat on the Senate Commerce Committee.
Following these discussions, Sacks posted on X, emphasizing that the order would not override legislators’ ability to address the “4 Cs” – child safety, communities (referencing data centers), creators, and censorship. Davis had previously warned in conservative media appearances about the need to maintain legislative rights in these areas.
The tech advisors subsequently updated the language of their draft to specify that the administration would advocate for federal AI legislation that would not preempt states’ abilities to pass children’s safety laws or establish local policies governing data centers. “The administration understands the various concerns stakeholders have about federal preemption, and we believe the EO took these concerns into account,” Sacks told The Washington Post.
This effort appeared to alleviate some of the initial criticism. On Friday, Davis told Bannon on his “War Room” show that the final version was a win for Trump, not the “tech bros.” Other Republicans who had previously criticized the initial draft remained silent. Sanders stated that she “looks forward to working with his administration and other stakeholders to make sure we win the race against China and also protect Americans.” A Blackburn spokesperson stated that the senator is leading work on a federal framework to codify the president’s executive order and protect children, creators, and conservatives.
The order is almost certain to face legal challenges from state attorneys general and consumer advocacy groups, some of whom questioned whether it represented an attempt to circumvent Congress. “They are pushing for a legally questionable EO because they know their no-guardrails position is so unpopular that they can’t win in Congress,” said Nathan Calvin, vice president of state affairs and general counsel at Encode, a group advocating for AI restrictions.
Sacks stated that the administration would “like to see Congress enact a federal framework, and in the meantime, we’re going to push back on the most excessive state laws, which this EO does.”
The order and the chip exports announcement last week highlight the growing influence of Jensen Huang, the Nvidia CEO, who first met with Trump in late January amid rising concerns about China’s growing competitiveness in artificial intelligence following the release of the AI app DeepSeek. Huang, leading a company valued at over a trillion dollars, had never previously been in the Oval Office.
This meeting marked the beginning of several attended by the tech CEO, Trump, Sacks, and Krishnan. Since then, Huang has become a frequent visitor to the White House, regularly discussing with Trump the lifting of restrictions on exports of Nvidia’s chips to China. Huang expressed support for an executive order limiting a growing patchwork of state AI laws during a meeting last month with Sacks and Krishnan, as first reported by The Wall Street Journal.
Huang is one of many tech executives with whom Trump has built relationships and consulted in his second term, alongside Elon Musk, Jeff Bezos, and other CEOs who attended his January swearing-in. (Bezos is the founder of Amazon and owns The Washington Post.) Democratic lawmakers have criticized the close ties and the donations made by many of these executives to Trump’s White House ballroom project, warning that the administration is granting the tech industry excessive influence and the freedom to write its own rules.
National security experts and lawmakers from both parties have criticized Trump’s decision to permit the sale of the H200 chips to China, for which the United States is set to receive 25 percent of sales. A bipartisan group of lawmakers has proposed the GAIN AI Act, which would prioritize U.S. companies for AI chips over those in China or other countries, and the SAFE Chips Act, which would limit the types of AI chips U.S. companies can sell to China.
“There has been strong bipartisan pushback on this issue,” said Chris McGuire, a National Security Council official during the Biden administration. “There certainly are many people in the administration, including people in the Cabinet, who are deeply skeptical about the idea of selling our most advanced technologies to China.”
One former Trump Commerce official, speaking anonymously, said the lack of semiconductor experts within the White House staff has made it easier for Huang and Nvidia to influence Trump’s views on chip exports. “There is no chip expert in the White House. That’s why we’re in the trouble we’re in,” the person said, adding that Trump appears to be making these decisions outside the usual bureaucratic process for export controls. “This was just a conversation with the president, and they just did it.”
When asked about the Nvidia decision, Commerce Secretary Howard Lutnick told CNBC that it was a deal between Huang and Trump. “So it’s the great American technologist talking to the great businessman president, and they reached what they thought was the right answer for this particular moment,” Lutnick said.
