White House Pushes for National AI Standard, Threatening State Regulations and Federal Grants

In its bid to centralise AI regulations, the White House is touting an executive order, actively challenging state regulations by conditioning all federal grants in compliance with a national framework, according to a draft reviewed by Axios.

The move follows President Donald Trump's public call on Tuesday for a single federal standard on AI, cautioning that the excessive divergence among states concerning the use of AI was posing a direct threat to the country's technology-driven economic growth.

Marking one of the Trump administration's most aggressive attempts to centralise US's AI policy, it would also give AI and crypto advisor David Sacks a central role in shaping cross-agency efforts, according to the draft summary, which officials noted was still in flux and open to many more changes.

Trump's intervention comes as Republicans in Congress debate whether to back federal pre-emption of state AI rules — an idea that has repeatedly failed on Capitol Hill amid bipartisan opposition.

House Majority Leader Steve Scalise is currently attempting to attach such a provision to the must-pass annual defence policy bill due in the coming weeks.

Writing on Truth Social on Tuesday, Trump said that investment in AI, while on one end was helping to make the US economy "the hottest in the world", was simultaneously being endangered by this very overregulation of states, adding that it was "threatening to undermine this growth engine".

He further accused several states of attempting to "embed DEI ideology into AI models" and argued that only a national standard could prevent what he called "woke AI".

The draft executive order, titled Eliminating State Law Obstruction of National AI Policy, directs federal agencies to move quickly to counter state regulations that conflict with what it describes as a "minimally burdensome" federal approach.

Within 30 days, it instructs the attorney general to establish an AI Litigation Task Force to challenge state laws, including on grounds that they improperly regulate interstate commerce.

It also requires federal agencies to identify state measures that contradict the order's objectives, particularly those that could force AI developers to disclose information in ways the administration says may violate First Amendment protections.

Within 90 days, Federal Communications Commission chair Brendan Carr would have to consider creating a federal reporting and disclosure framework for AI models that could override state rules.

Federal Trade Commission chair Andrew Ferguson would be asked to issue guidance on how the FTC Act's prohibition on unfair or deceptive practices applies to AI systems.

Sacks and the White House Office of Legislative Affairs would also be tasked with drafting legislative recommendations for a national regulatory framework that explicitly pre-empts state law.

States that refuse to align with the framework could risk losing federal funds.

The draft directs the Commerce Department to outline eligibility conditions for states seeking remaining Broadband Equity, Access and Deployment funding and asks all agencies to assess whether state AI legislation conflicts with federal policy when distributing grants.

While ultimately it does not have any legal authorisation to override state regulations directly — a power reserved for Congress —Washington's validation is a significant factor, as it can instruct the agencies concerned, who in turn can move to apply pressure, coordinate litigation and build momentum for a national standard.

A White House official, responding to questions about the draft, said any discussion of executive orders was speculative until formally announced.

Meanwhile, Republicans in Congress are racing to determine whether a pre-emption clause can be added to the defence bill, though previous attempts have been firmly rejected.

Senate Majority Whip John Thune, commenting on these developments, noted that lawmakers are looking for an approach that respects state authority while recognising the importance of protecting interstate commerce.

The debate has also caused fissures within the Republicans beyond Capitol Hill, as the GOP officials, such as Florida governor Ron DeSantis, Arkansas governor Sarah Huckabee Sanders, and conservative activist Mike Davis have all opposed federal pre-emption, calling it a concession to Big Tech.