Technology companies will be in for a bumpy ride in the second Trump Administration. President-elect Trump has promised to adopt policies that will accelerate the United States’ technological decoupling from China. However, he will likely take a more hands-off approach to regulating artificial intelligence and reverse several Biden Administration policies related to AI and other emerging technologies.
On the campaign trail, President-elect Trump made clear he intends to employ industrial policy tools, including tariffs, outbound investment restrictions, export controls, and other economic and national security levers that will further decouple technological supply chains, restrict cross-border innovation, and limit commercial activity with Chinese entities or with entities in China, including U.S. entities.
The President-elect’s strict decoupling approach to China will likely represent an escalation of the Biden Administration’s two-part strategy to out-innovate China in the United States and restrict the flow of critical technologies to “countries of concern.” Under President Biden, the Commerce Department recently concluded a comment period on a proposed rule regulating connected vehicle technologies, continuing work that began in President Trump’s first term. Similarly, the Justice Department recently published a proposed rule regarding access to sensitive personal and government data in “countries of concern.” And the Treasury Department recently finalized its long-anticipated rule restricting outbound investment.
In Congress, the House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party served as a successful bipartisan clearinghouse for recommending policies aligned with this two-part strategy in the 118th Congress. Although the Select Committee lacked legislative jurisdiction, House Speaker Mike Johnson has announced that it will continue to hold hearings and conduct broad investigations into U.S. business activity in China in the next Congress.
When President-elect Trump assumes office, we expect him to continue this two-prong strategy, although he will place greater emphasis on restricting foreign technologies than on promoting U.S. innovation.
For example, his proposed tariffs on imports from China would impose increased costs on Chinese products while also increasing prices for American consumers (and for American businesses that rely on input goods from China). Moreover, House of Representatives Republicans have shown significant appetite for two successive Congresses to enact comprehensive outbound investment, sanctions, and export-controls legislation. House leaders are debating whether to append provisions related to Uyghur forced labor, supply-chain restrictions, outbound investment notice requirements, and other controls to the FY25 National Defense Authorization Act, which is likely the last significant legislative vehicle of the 118th Congress. The outbound investment legislation would be a notable inclusion, given that the Treasury Department’s final rule is scheduled to take effect on January 2.
On the domestic front, Trump may seek to roll back aspects of the CHIPS and Science Act, a bipartisan hallmark achievement of the Biden Administration. In a preelection gaffe, Speaker Johnson said that Republican lawmakers would “probably” try to repeal the CHIPS Act, though he quickly walked his comments back. Ultimately, while the Commerce Department under Trump will likely reverse Biden Administration policies requiring CHIPS Act funding applicants to make childcare and workforce development commitments, Republicans appear largely aligned on the strategic priority of bolstering advanced manufacturing capacity in the United States. Rather than repeal the CHIPS Act, a Trump Administration may seek to repurpose unspent CHIPS Act funds (which would require congressional approval) to other priorities or refocus funding exclusively on U.S.-based companies instead of bolstering companies based in allied countries.
Even with the change in party control of the White House and Senate, artificial intelligence regulation is likely to remain a significant policy priority at the federal and state levels. The Republican governing trifecta is likely to continue promoting AI development and deployment with a possibly greater risk tolerance for the nascent technology.
President-elect Trump pledged to immediately revoke the Biden Administration’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence and implement an AI policy “rooted in free speech and human flourishing.” This suggests a comparably laissez-faire approach to regulating AI, and we expect the incoming Congress and administration to most emphasize private AI innovation as opposed to government use and management of AI.
Both the House and Senate have invested ample time and resources in the 118th Congress to hold hearings and introduce legislation related to AI. Still, significant AI bills have not advanced on the floor of either chamber. Bills that have advanced through committee tend to relate to the government’s own evaluation, procurement, and use of AI, or to providing resources to support AI research and development. Congress will likely continue to pursue these priorities while also taking cues from the new administration.
Meanwhile, states will work in parallel to regulate AI and privacy, as we view preemptive federal legislation to be unlikely. Even though high-profile AI safety bills, like California SB 1047, were not enacted, lawmakers in California, Colorado, Texas, and other states will continue to pursue comprehensive legislation to impose standards and guardrails on the most sophisticated and high-risk systems.
Finally, Congress and the Trump Administration will likely renew efforts to strengthen the cryptocurrency industry. Both the Trump campaign and congressional Republicans have expressed strong support for allowing digital currencies to grow, opposing Securities and Exchange Commission Chair Gary Gensler’s efforts to regulate the industry. Shortly after Election Day, House Majority Leader Steve Scalise included the creation of a “regulatory framework that allows digital assets to grow with certainty” on a list of House Republican priorities for the first 100 days of the next Congress.