The 'Washington Effect' could decide the AI race

Ammon

3 hours ago

Ammon News -
BALTIMORE – Five months into his second presidency, Donald Trump is already ushering in a new era of imperial technological governance in which both domestic and foreign regulatory authorities are subordinated to a US administration increasingly dominated by Big Tech.
Silicon Valley has cultivated its political influence through aggressive lobbying and strategic presidential appointments. Now, despite the tech industry's distaste for Trump's tariffs and policy priorities, its efforts are paying off, as Republican leaders work to stymie tech regulation not just in Congress – where legislative progress was always unlikely – but also at the state level and around the world.
As part of Trump's 'big, beautiful' budget bill, lawmakers are considering a decade-long ban that would block US states from regulating AI. The proposed ban would severely undermine efforts to mandate transparency in AI systems, protect consumers from algorithmic price fixing, and curb worker surveillance. Although it's unlikely to survive the Senate's procedural rules, Republican Senator Ted Cruz has pledged to pursue a similar prohibition in future legislation.
For the tech industry, federal preemption has long been a reliable strategy for avoiding troublesome state laws. It also dovetails with Republican efforts to centralize AI regulatory authority within the White House. This may explain why the debate over the proposed ban has largely focused not on states' rights, but on geopolitical anxieties.
For example, at a congressional hearing on the proposal, lawmakers and expert witnesses turned what should have been a conversation about the role of statehouses in Sacramento and Denver into sprawling diatribes against overregulation in Brussels and authoritarianism in Beijing. If the United States ends up with a patchwork of state AI laws, the argument goes, American companies will struggle to innovate and compete with China.
Throughout that hearing, industry speakers repeatedly cited flagship European Union regulations like the GDPR and AI Act, arguing that regulatory overreach has hindered Europe's ability to produce world-class tech companies. The message was clear: to defeat China, the US must not become another Brussels.
But is Brussels still Brussels? Well before any discussion of AI preemption, the Trump administration had begun pressuring the EU into watering down tech laws like the Digital Services Act and Digital Markets Act. In February, speaking before a room of EU and world leaders at an AI summit in Paris, Vice President J.D. Vance decried the 'onerous international rules' that apply to US businesses. At the same summit, French President Macron signaled his desire for the EU's tech laws to 'simplify' and 'resynchronize with the rest of the world.'
There are signs this strategy is working. The EU's recent AI Continent Action Planreflects a softer approach to regulation, and enforcers are scaling back fines on US tech firms. Meanwhile, those same US companies are keeping up the pressure, lobbying the European Commission to keep AI rules 'as simple as possible.' Tech regulation also remains a point of contention in Trump's trade policy. In May, Trump threatened to impose 50% tariffs on EU imports as negotiations over digital taxes and tech regulation remained deadlocked.
US politicians often portray the 'Brussels Effect' as a cautionary tale, based on the largely discredited notion that the EU, obsessed with setting de facto global standards, overplayed its hand and ultimately sabotaged its own tech sector. But now we are witnessing the emergence of a 'Washington Effect': a contraction of tech governance at all levels – local, state, and multinational – aimed at shoring up the supremacy of US firms, with regulatory power increasingly concentrated in the federal government's executive branch.
In pursuit of global tech dominance, former President Joe Biden – a staunch advocate of the US-led liberal world order – worked with allies to coordinate 'AI safety networks' and reconfigure key lines of tech hardware production. By contrast, as historian Jake Werner observed, Trump 'conceptualizes the economy as a market where those with bargaining power squeeze profit out of those who lack it, rather than as a supply chain in which power accumulates at strategic nodes associated with scarce goods or technologies.'
With its decision to abandon Biden's semiconductor export restrictions, the Trump administration has shown that it sees no need to weaponize access to high-end graphics processing units (GPUs) to bring other countries to the table; nor does it show much interest in multilateral coordination. Speaking about the recent EU tariff announcement, Trump was characteristically blunt: 'I'm not looking for a deal. We've set the deal.'
That same logic is playing out in US domestic politics. Gone are Biden's 'legislative convenings' that brought together state lawmakers to address nationally significant issues. Instead, Republicans want to turn the White House into the central clearinghouse for all AI policy, even if that means banning state officials from introducing protections against abusive practices.
These measures complement each other: while administration officials pressure foreign governments to ease up on US firms, Congress moves to block state-level oversight altogether. Washington, in short, is being positioned as the only place where decisions can be made.
The irony is this: even in an age of regulatory retreat, federal authority will shape the future trajectory of US tech. 'Winning the AI race,' a vague and largely undefinable goal, will depend as much on US state power and political coercion as on private investment. However slim the prospects for multilateral collaboration may be, the Washington Effect is rapidly diminishing them.
Much will depend on how China responds. Still, with the exception of those who stand to profit directly from the tech arms race, the outlook is bleak: as nationalist rhetoric intensifies, the interests of dominant tech firms increasingly outweigh the vision of an innovation system that serves the public good.
The US likes to cast itself as the world's foremost champion of democracy and innovation. But its strategy for achieving AI primacy depends on imperial overreach and the unchecked expansion of executive power. The Trump administration isn't favoring red states over blue, or cooperating with European allies to beat China. Instead, it is seeking to strip power from state authorities and foreign partners alike, prioritizing predation over effective governance.