The United States AI regulatory environment for 2025

Based on three policy presentations I attended this week from the Center for Security and Emerging Technology (CSET), Cooley, and the Federalist Society, I expect significant shifts in the United States AI regulatory environment by 2025.

Key themes will emerge around national competitiveness, reduced regulatory burden, and strategic technology competition with China.

Here are the highlights:

Inside the Beltway…

Innovation-first policy approach: With Trump 2.0, a fundamental shift in AI policy direction is emerging, with innovation as the central "north star" principle. This pivot represents a deliberate departure from the Biden administration's earlier cautious stance and the EU's comprehensive regulatory framework.

The preference for using "advanced computation" terminology over "AI" suggests a deliberate reframing of the technological landscape, potentially to avoid the regulatory and political baggage associated with the broader AI term. This semantic shift could signal a more technically oriented and innovation-friendly policy framework.

China competition and global positioning: Trump 2.0 and new Congressional leaders are intensely focused on technological competition with China while actively resisting European-style regulatory frameworks. This dual approach suggests a deliberate positioning of US policy to maintain competitive advantages in the global AI race. 

Legislative and executive implementation: Unified GOP government control could accelerate policy implementation, though the Senate's 60-vote filibuster threshold ensures that major legislation will still require bipartisan compromise. The expected repeal of Biden's AI Executive Order will signal a dramatic shift in federal AI governance. The first 100-200 days appear critical, particularly regarding budget reconciliation processes that could reshape R&D funding and tax policy.

Tech industry regulation and reform: Under the leadership of new FCC Chairman Brendan Carr, a significant shift in tech industry oversight will emerge, centered on Section 230 reform. While scrutiny of major tech companies continues, the focus is pivoting from market power concerns to content moderation and perceived censorship issues. This evolution suggests a potentially differentiated regulatory approach between large "Big Tech" firms and “Little Tech” -  smaller technology companies, leading to more nuanced oversight frameworks.

Corporate landscape and competition policy: The technology sector appears poised for increased merger and acquisition activity, even as antitrust scrutiny of major tech companies continues. This seemingly paradoxical approach suggests a nuanced policy environment that may encourage market consolidation among smaller players while maintaining vigilance over Big Tech's market influence. The "techlash" against Big Tech continues with potentially different enforcement priorities around content moderation and perceived censorship issues.

Digital safety and intellectual property protection: In 2025, expect a significant focus on protecting individuals and creative industries. This includes efforts to combat deepfakes, enhance child safety in digital spaces, and strengthen intellectual property protections for creative industries affected by AI technologies. These initiatives reflect an understanding that AI advancement must be balanced with protecting societal interests and existing creative rights, even as technology evolves rapidly.

Federalism and regulatory complexity: State-level AI regulation continues to evolve independently of federal policy, creating a complex business compliance landscape. This growing patchwork of state regulations presents practical challenges for companies operating across multiple jurisdictions while potentially providing advocates of safe AI a venue to slow the acceleration of advanced and frontier AI models.

In the world…

International standards and guardrails: Despite America’s emphasis on domestic innovation and competition with China, the need for international cooperation through multilateral AI summits is acknowledged. This suggests a nuanced approach that balances aggressive technological advancement with recognizing that specific global standards and guardrails are necessary for stable technological development and deployment. The continued use of multilateral AI summits indicates a recognition that while competition with China is paramount, international cooperation and standard-setting remain necessary for establishing workable global guidelines.

National security and military AI integration: The US government has significantly expanded its military AI capabilities through various initiatives, with the Department of Defense's Chief Digital and AI Office leading this transformation. Establishing programs like Unit X demonstrates a concrete commitment to integrating AI technologies into defense operations. This military modernization effort is closely tied to strategic competition with China, which has emerged as a central driver of US policy decisions in the AI space. The emphasis on military applications reflects a broader understanding that AI superiority is crucial for maintaining strategic advantages in modern warfare and defense capabilities.

Talent and immigration policy: Recognizing human capital as a critical component of American AI leadership has sparked renewed focus on immigration reform, particularly regarding technical talent in the United States. Policy discussions will increasingly center on creating pathways to retain American college graduates while attracting highly skilled professionals in the AI and technology sectors. This emphasis on talent acquisition and retention acknowledges that maintaining technological leadership requires investment in research and development and access to global expertise.

In the states…

State-level regulatory momentum: Without comprehensive federal legislation, states will increasingly take the initiative to develop their own AI regulatory frameworks. This growing patchwork of state-level regulations represents a significant shift in how AI governance is evolving in the United States. The trend suggests that states are unwilling to wait for federal action. They are moving forward with their AI oversight and regulation approaches, creating a dynamic and rapidly evolving regulatory landscape. States are creating rules, establishing new oversight bodies, defining penalties for non-compliance, and developing frameworks for monitoring and enforcing AI-related regulations. This includes creating new institutional capabilities and expertise within state governments to oversee AI deployment and use effectively.

State-level consumer protection focus: A central theme emerging across state initiatives is emphasizing consumer protection measures, which have long been the remit of states under America’s federal system. This focus reflects growing public concern about AI's impact on individual privacy, rights, data protection, and interests. States are particularly attentive to establishing guardrails that protect consumers from potential AI-related harms while ensuring transparency in how AI systems interact with and affect their citizens.

State-level anti-discrimination and fairness standards: A significant component of state-level AI legislation will focus on preventing discrimination and ensuring fairness in AI systems. This theme emerges from the broader consumer protection emphasis but deserves specific attention as states seek to develop detailed requirements for AI fairness testing, bias detection, and mitigation strategies. 

Pro-tip: Make sure you have a professional with expertise in geopolitical communications on your team. Such a pro will help you navigate the challenges of geopolitics on your business objectives and help you confidently speak about this environment.

Caracal is here to help.

Enjoy the ride + plan accordingly.

-Marc