When the Senate advanced the One Big Beautiful Bill earlier this month, it stripped out a House-passed provision that would have imposed a ten-year moratorium on state-level artificial intelligence regulations. That move has cleared the way for blue-state lawmakers to push forward the Biden-era AI agenda—potentially threatening America’s global competitiveness, especially against China.
More than 1,000 AI-related state and local laws are now pending nationwide, risking a patchwork of costly and confusing regulations that could undercut President Trump’s national agenda for AI-driven growth and opportunity.
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This week, the White House released its eagerly awaited AI Action Plan, and Trump addressed a summit on “Winning the AI Race.” America will lose that race unless Congress steps up to protect national interests and the AI industry from a tsunami of state mandates.
Progressive lawmakers in California, New York, Colorado, and Illinois are moving to dictate the evolution of the AI marketplace. Drawing from the Biden administration’s playbook—which blends DEI with European-style technocratic mandates—these states are advancing a heavy-handed regulatory agenda. President Biden issued an historically long executive order on AI, proposed an AI Bill of Rights that read like a woke agenda for tech, and created a new AI safety bureaucracy—all without waiting for congressional input.
In his first week in office, President Trump wisely set out to undo Biden’s fear-based agenda, replacing it with a pro-innovation blueprint. As Vice President J. D. Vance told the Paris AI Action Summit in February, “We believe that excessive regulation of the AI sector could kill a transformative industry just as it’s taking off, and we’ll make every effort to encourage pro-growth AI policies.”
The administration has made it clear that beating China in AI is its top priority, and that freedom is the key to winning. “We’ve got to let the private sector cook,” says Trump’s AI czar David Sacks, referring to the administration’s desire to give American firms the freedom to “out-innovate the competition.”
Progressive state lawmakers are going in a different direction. California and New York are looking to regulate frontier AI models in an extraterritorial manner, citing amorphous safety concerns. Colorado has already passed a bill to regulate AI apps preemptively under a disparate-impact standard to root out “algorithmic bias.” (See Robert VerBruggen’s essay on this in the Summer 2025 issue of City Journal.) California has a similar bill, while Illinois is looking to regulate using a combination of these approaches.
These four progressive states alone are currently considering more than 240 new AI laws, roughly one-quarter of all state laws now pending. These large progressive states will call the shots for the entire nation, including the red states.
The opportunity costs of this regulatory thicket will be massive. It will lead to greater market fragmentation and undermine nationwide growth and productivity improvements. States cannot even agree on how to define the term “artificial intelligence” or “automated decision system”—one 2024 survey of state proposals identified 57 definitions. “Little Tech” innovators will be left scrambling to cope with the mounting costs of the contradictory mandates and liability threats.
Some blue-state lawmakers admit as much. When signing the Colorado bill into law last May, Governor Jared Polis said the measure would “create a complex compliance regime for all developers and deployers of AI” through “significant, affirmative reporting requirements.” Polis also called for Congress to preempt Colorado’s law with a “needed cohesive federal approach.” More recently, he endorsed a federal AI moratorium.
Some state lawmakers cite “the probability of congressional inaction” in their push for parochial AI regulations. But that doesn’t mean that states should have free rein over the national marketplace. Congress has previously blocked anti-competitive state laws for airline, transportation, and telecom services to protect the interstate marketplace. The stunning growth of the Internet and digital commerce followed Congress’s passage of the Telecommunications Act of 1996 and the Internet Tax Freedom Act of 1998, which preempted conflicting state regulations and discriminatory taxes. In their place, Congress established a national framework that enabled innovation to flourish without fear of fragmented, state-imposed mandates.
There is also a national security imperative to protect the development of a robust marketplace. Ironically, America appears ready to move away from a single digital free market just as Europe is finally realizing that it needs one to stay competitive and avoid stifling the next generation of innovators.
Congress must act swiftly to halt the patchwork of progressive state and local AI regulations and support the Trump administration in advancing a coherent national policy. Only then can the U.S. hope to outpace China in the most consequential technological revolution of our time.
Photo by Sean Rayford/Getty Images
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