What Trump's AI Deregulation Means for Compliance in 2025

On November 6, 2024, Donald Trump was elected for a second term as President of the United States, signaling potential changes in the regulatory landscape for artificial intelligence (AI). His administration's approach to AI policy is expected to focus on fostering innovation, reducing federal oversight, and emphasizing AI’s role in national security.

With plans to repeal previous regulations, including President Biden’s 2023 AI Executive Order, Trump’s AI policy may create a more permissive environment for development. However, this shift raises important questions about compliance, cybersecurity, and ethical practices for AI-driven organizations. As deregulation progresses, it becomes crucial for companies to adopt proactive compliance strategies that ensure responsible, secure, and ethical AI development.

Key aspects of Trump’s AI policy

Donald Trump’s re-election could mark a significant shift in the U.S. approach to artificial intelligence (AI) regulation. Trump has pledged to repeal President Biden's October 2023 AI Executive Order, which aimed to increase oversight on AI development. There are several key aspects of Trump’s stance on AI policy that businesses should be aware of.

Repealing Existing AI Regulations

Trump’s administration aims to revoke President Biden's AI executive order, which was designed to instill rigorous safety standards, ethical guidelines, and transparency in AI development. The Republican platform criticizes this order, claiming it will over-regulate the tech sector and stifle innovation. Biden's order required companies to meet specific reporting standards, identify and correct biases in AI models, and cooperate with the newly formed U.S. AI Safety Institute (AISI) on compliance issues. Trump’s plan argues that removing these requirements will create a more favorable environment for rapid advancements in AI technology.

Encouraging AI Development

A core component of Trump’s policy is reducing regulatory barriers in AI to promote an environment that champions innovation and market competitiveness. This deregulatory stance is designed to position the United States as a global leader in AI by emphasizing rapid technological progress with minimal government interference. This policy suggests that the removal of regulatory constraints will allow U.S.-based tech firms to accelerate development and achieve breakthroughs more freely, aiming to ensure that American companies are at the forefront of global AI advancements.

Enhancing Military AI Capabilities

Trump’s AI policy includes a substantial emphasis on military applications of AI, aligning with his administration's broader national security goals. These initiatives aim to develop cutting-edge AI technologies that could be leveraged for intelligence, surveillance, and autonomous combat systems, ultimately aiming to maintain U.S. military superiority. The proposed policy underscores the importance of AI as a strategic asset in national defense and calls for substantial investment in AI for defense-specific applications.

Establishing Industry-Led Evaluation Agencies

To ensure AI technologies are safe from foreign influence while keeping the government’s role minimal, Trump’s administration proposes creating industry-led evaluation agencies. These agencies, driven by private sector expertise, would be responsible for assessing the safety, integrity, and resilience of AI models, with a particular focus on defending against cyber threats and foreign interference. By entrusting oversight to industry players rather than government agencies, this plan seeks to harness private sector insights while maintaining security measures that protect critical AI systems from external threats.

These policy directions indicate a shift towards deregulation and increased private sector involvement in AI development, with a significant emphasis on national security applications.

Impact of AI deregulation on innovation and development

Industry impact

The tech industry, particularly companies involved in artificial intelligence development, could experience significant changes under Trump’s proposed AI policies. By reducing federal regulatory requirements, these policies would lower compliance burdens on AI developers, potentially creating a more permissive landscape for innovation. However, this deregulatory approach is likely to increase competition within the industry, encouraging companies to pursue more ambitious projects without the constraints of extensive federal oversight. The relaxed regulatory environment may lead to faster advancements in AI technologies as companies allocate resources more freely towards research and development rather than compliance.

International relations

Trump’s protectionist policies could result in stricter export controls on U.S. AI technologies, especially in regard to China. This shift may limit the global flow of AI innovations and hinder cooperative efforts to establish international standards for AI safety, ethics, and security. By imposing tighter restrictions on AI exports, the administration would prioritize national security and economic advantage over collaborative international progress in AI, which could lead to geopolitical tensions and encourage other countries to adopt similarly restrictive measures.

State-level regulation

A reduction in federal oversight could encourage individual states to implement their own AI regulations. Without cohesive federal guidelines, states might pursue varying levels of regulation in response to local priorities and concerns. This decentralized approach could lead to a fragmented regulatory landscape across the United States, with some states adopting strict controls on AI development and others opting for a more lenient approach. Such a patchwork of regulations might pose challenges for companies operating nationally, as they would need to navigate an array of state-specific requirements, potentially creating disparities in how AI technologies are developed and applied across the country.

Concerns and criticisms of AI deregulation

Critics of Trump’s proposed deregulation of AI highlight several major concerns, with consumer safety, privacy, and ethical standards being at the forefront.

• Consumer safety and privacy – Without strong federal oversight, there may be insufficient safeguards to protect users from potential harms linked to AI. Federal regulations provide a structured framework for ensuring that AI systems undergo rigorous testing for accuracy, reliability, and bias. In their absence, consumer safety may be compromised as companies may not be held to a consistent standard of quality and ethical responsibility. This could lead to situations where AI technologies with unknown or unaddressed risks are introduced to the market prematurely, potentially endangering users.
• Misuse and uncontrolled AI – Without regulatory boundaries, there’s an increased possibility that AI applications could be deployed for purposes that infringe on individual rights or public safety, particularly in areas like surveillance, profiling, or autonomous systems. Experts caution that this environment could encourage “black box” AI — systems that operate in complex ways that are difficult to audit or understand — resulting in decisions that are untraceable and potentially unfair or unsafe.
• Data collection and usage practices – In a more permissive regulatory landscape, AI companies may feel freer to engage in aggressive data collection, often involving sensitive personal information, to improve and expand their AI capabilities. The absence of stringent federal privacy standards could mean less transparency for consumers about how their data is used, shared, or stored. This situation risks diminishing consumer control over personal information and could increase the likelihood of privacy violations, as companies prioritize rapid AI development over user protections.
• Algorithm bias and discrimination – Current regulations often require companies to address and mitigate biases that may be present in AI systems, particularly those involving protected characteristics like race, gender, and socioeconomic status. Reducing these requirements could result in less rigorous testing for bias, increasing the risk that AI tools could inadvertently propagate or even amplify discriminatory practices. Without federal mandates for bias testing and correction, developers may lack the incentive to ensure that their AI systems are fair and equitable, leading to potential violations of privacy and civil rights.

Altogether, critics argue that while deregulation may accelerate innovation, it also creates a heightened risk landscape where consumer safety, data privacy, and algorithmic fairness could be compromised for the sake of speed and market advantage.

Proactive compliance strategies for AI-driven organizations

AI-driven organizations can implement the following strategies to navigate potential deregulation of AI under Trump’s administration, ensuring continued adherence to high standards of safety, ethics, and responsibility even in a less-regulated environment.

1. Establish Internal AI Ethics Committees – Even with reduced federal oversight, an internal ethics committee can maintain accountability for the ethical implications of AI technologies. This committee should regularly review AI projects for compliance with safety and ethical standards, focusing on issues like bias, transparency, and privacy.
2. Implement Robust Data Privacy Practices – In a deregulated landscape, companies might have more leeway with data collection and usage. Proactively adopting stringent data privacy practices — such as anonymization, data minimization, and clear opt-in policies — can help maintain user trust and prepare companies for potential future regulations. Adopting these practices preemptively also aligns with privacy standards in other regions, such as GDPR, which may be beneficial for companies with global operations.
3. Prioritize Bias Detection and Mitigation in Algorithms – Reduced regulations might mean fewer legal requirements for bias testing, but proactively detecting and mitigating bias in AI systems is crucial for maintaining fair and non-discriminatory practices. Organizations can implement internal auditing processes to assess algorithmic bias, especially around sensitive attributes like race, gender, and socioeconomic status, helping to ensure ethical AI usage and prevent potential reputational damage.
4. Enhance Cybersecurity Measures for AI Systems – AI systems often handle sensitive data and could be vulnerable to cyber threats. In anticipation of deregulation, companies should bolster cybersecurity measures specific to AI applications, such as implementing encryption for data-in-use, developing tamper-proof logging, and performing regular security audits. This will help secure AI models and data from unauthorized access, maintaining a robust defense posture in the absence of mandated security requirements.
5. Develop Transparent Reporting Standards – Transparency can serve as a key differentiator in a deregulated environment. AI-driven organizations can voluntarily develop and publish transparency reports that disclose data usage, model accuracy, error rates, and ethical safeguards. These reports can help build public trust by providing insights into the organization's commitment to responsible AI practices, even in the absence of strict regulatory requirements.
6. Engage in Cross-Border Compliance Planning – U.S. deregulation could lead to inconsistencies with international standards. AI-driven organizations should proactively monitor and prepare for cross-border compliance by aligning with international guidelines like GDPR and ISO/IEC standards for AI. This preparation not only keeps companies competitive globally but also simplifies compliance for multinational operations by adopting a unified approach to data protection and ethics.
7. Create AI Risk Management Frameworks – In a deregulated environment, developing a structured framework to assess and mitigate AI-related risks becomes critical. Risk management frameworks can help identify potential risks in AI deployment, such as unintended consequences of autonomous systems or AI’s impact on labor markets.
8. Adopt Voluntary Industry Standards and Best Practices – Many industry bodies, like the IEEE and NIST, offer AI ethics and safety guidelines. By voluntarily adopting these frameworks, organizations can maintain high standards and prepare for potential regulatory changes down the line.
9. Invest in Explainable AI (XAI) Development – Explainable AI helps organizations make their AI systems more transparent and interpretable to users, which is valuable in a deregulated setting where accountability may otherwise be diminished. By investing in XAI, companies can provide insights into how AI models make decisions, ensuring that users, clients, and stakeholders understand AI outputs.
10. Monitor and Influence Policy Developments – AI-driven organizations can stay informed of policy changes and participate in advocacy or industry groups to help shape future AI regulation. By engaging with policymakers and other stakeholders, organizations can contribute to a balanced regulatory landscape that encourages innovation while protecting consumer rights.

Implementing these strategies can help AI-driven organizations operate responsibly and sustainably, even in a deregulated environment, while positioning themselves to quickly adapt if regulatory landscapes change.

Is Your Organization Ready for the Next Wave?

As AI regulations loosen under Trump’s administration, organizations have a unique opportunity to lead responsibly by establishing internal standards for ethical and secure AI practices. By implementing strategies that prioritize data privacy, mitigate algorithmic bias, and engage in cross-border compliance planning, companies can navigate deregulation confidently while preparing for potential regulatory shifts in the future.

This proactive approach not only positions organizations to maintain trust and accountability but also safeguards them against the ethical and operational risks that may arise in a less-regulated AI landscape. Staying ahead with these compliance strategies can ensure that AI continues to advance in a way that respects consumer rights, safety, and global standards.

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