The Trump administration recently unveiled a new action plan relating to artificial intelligence (AI) technology that focuses on removing regulations and/or other barriers, building upon President Donald Trump’s prior executive orders (EO) related to AI. The plan seeks to pressure states to deregulate, as many states and local jurisdictions are expected to step in to address regulatory gaps left by the federal government’s hands-off approach.
Quick Hits
- The Trump administration released a new AI action plan that presents a broad roadmap for AI development in the United States.
- The plan aims to eliminate regulatory barriers and promote innovation in AI, promote the adoption of AI across the federal government, and increase workforce development in the private sector.
- The plan further seeks to discourage states from imposing their own regulations by recommending that funding for AI projects be sent to states with favorable regulatory climates.
On July 23, 2025, the White House released a policy document titled “Winning the Race: America’s AI Action Plan,” setting forth a roadmap for federal AI policy structured around three pillars:(I) innovation, (II) infrastructure, and (III) international diplomacy and security. The plan could have significant implications for employers adopting and utilizing AI and similar technologies amid a patchwork of regulations across states and even cities.
Among its wide-ranging set of goals, the plan focuses on “remov[ing] red tape and onerous regulation” concerning AI, accelerating the adoption of AI across the federal government, and promoting AI education and workforce development. In particular, the plan directs certain federal funding decisions for AI-related projects to be guided by states’ regulatory climates, potentially pressuring states and local jurisdictions to avoid implementing new AI laws or regulations.
Shifting Policy and Regulatory Landscape
Although AI promises productivity and efficiency, potential risks remain—particularly in the area of automated decisionmaking tools. While the Biden administration previously sought to balance AI innovation with regulatory safeguards to protect employees and consumers (such as concerns about employment discrimination, privacy concerns, and job displacement), President Trump has reversed course, rescinding previous executive orders designed to impose stronger oversight and controls.
The Trump administration’s new AI action plan signals a regulatory rollback, instructing the Office of Science and Technology Policy (OSTP) to solicit information from businesses and the public on federal regulations that “hinder AI innovation and adoption.” Further, the Office of Management and Budget (OMB) is directed to identify and revise or repeal regulations, guidance, administrative orders, and other federal policies that “unnecessarily hinder AI development or deployment.”
New Limits on State Regulation?
Crucially, the action plan addresses the interplay between federal and state regulations. Several states and local jurisdictions—including California, Colorado, Illinois, New York City, Texas, and Utah—have implemented AI laws or regulations. Onlookers have anticipated that state and local jurisdictions will continue to implement new employee and consumer protections in the absence of federal action.
However, the administration’s new action plan recommends that OMB work with federal agencies with “AI-related discretionary funding programs to ensure, consistent with applicable law, that they consider a state’s AI regulatory climate when making funding decisions and limit funding if the state’s AI regulatory regimes may hinder the effectiveness of that funding or award.” (Emphasis added.)
That recommendation comes after congressional lawmakers recently proposed a 10-year moratorium on state AI regulations in the recently passed federal spending bill before dropping it at the last minute before passage. These efforts could influence future state laws and regulations.
Further, the plan recommends that Federal Trade Commission (FTC) investigations initiated under the prior administration “ensure that they do not advance theories of liability that unduly burden AI innovation.” The plan also suggests that FTC final orders, consent decrees, and injunctions be reviewed and modified or set aside to the extent that they “unduly burden AI innovation.”
Addressing Workforce and Labor Market Implications
In addition, the action plan focuses on AI’s workforce implications, emphasizing the need for AI literacy and skills development to ensure that American workers are equipped to thrive in an AI-driven economy. The plan follows President Trump’s EO 14277 to promote education on and integration of AI in K-12, higher education, and workplace settings through public-private partnerships with industry leaders and academic institutions.
Specifically, the AI action plan recommends that the U.S. Department of the Treasury issue guidance clarifying that AI literacy and skills development programs may qualify for eligible educational assistance as a tax-free working condition fringe benefit under Section 132 of the Internal Revenue Code. The plan also recommends that the U.S. Department of Labor (DOL) establish an “AI Workforce Research Hub” to evaluate and mitigate the impact of AI on the labor market, including funding retraining for individuals impacted by AI-related job displacement.
Next Steps
Employers may want to review their use of AI in the workplace and consider the potential benefits. They may also want to invest in training programs and collaborate with educational institutions to prepare their workforce for the technological advancements brought about by AI.
At the same time, potential AI risks remain, implicating existing federal, state, and local laws on antidiscrimination, privacy, and automated decisionmaking tools. It is unclear whether states and local jurisdictions will limit enforcement of existing AI regulations and/or delay implementing new laws and regulations. Regardless of state regulatory approaches, employers may want to continue implementing policies and procedures that set forth reasonable guardrails that allow for innovation and expanded AI use while limiting potential risks associated with the use of automated decisionmaking tools in the workplace.
Moreover, employers may want to audit the results of AI when used to make employment decisions to promote fairness, accuracy, and appropriate human oversight, as well as evaluate whether it would be appropriate to provide affected employees with the opportunity to appeal or request review of decisions made or materially influenced by AI.