Trump AI Plan Threatens Federal Funding for States with Strict Regulations

The Trump Administration released the "Winning the AI Race: America’s AI Action Plan," focusing on accelerating AI innovation, building U.S. AI infrastructure, and leading international AI diplomacy while minimizing regulatory burdens. A key feature of the plan involves threatening to withhold federal AI-related funding from states that impose what the federal government deems "burdensome" AI regulations, although it allows states to pass "prudent laws that are not unduly restrictive to innovation." This approach revives earlier efforts, such as the "Big Beautiful Bill," which sought to limit state AI regulations but faced significant opposition and was ultimately dropped. The plan also calls for rolling back environmental rules to facilitate the building of power-hungry data centers and emphasizes competing with China in AI development while downplaying automation risks. Critics argue the plan favors Big Tech interests and could undermine consumer protections, while supporters from the tech industry have welcomed the reduced regulatory framework. The administration’s stance signals a preference for a federal approach that prioritizes innovation and infrastructure over state-level AI regulatory control.