President Trump is keen to unleash the country’s AI companies on the world, with the Trump administration AI policy arguing that loosening regulations will allow the US to dominate the global AI race, even as experts are alarmed about more surveillance, disinformation, and risks to humanity.
Yet, the President Donald Trump AI policy cannot shield US-based companies from the rules they face abroad. For tech giants aiming to expand globally, international standards will be just as important as domestic policy, and nowhere is this more evident than in Europe.
Are Laws Enough to Regulate AI?
The White House’s recently discussed the AI Action Plan aims to roll back what it calls paralyzing red tape, allowing US companies to innovate freely. While Washington can let go of domestic rules, it cannot force the standards applied abroad.
The EU, a key market for US tech giants, is committed to setting binding rules for AI. For years, the European digital regulations have shaped global tech habits by way of what scholars call the “Brussels Effect.”
The AI regulation in the EU landmark data privacy law, the General Data Protection Regulation (GDPR), turned into de facto global standard because companies considered it too costly to operate by different rules in different territories.
Over the past decade, the EU AI regulation act adopted a series of policies designed to balance innovation with accountability, transparency, and human rights protections. Companies that wish to sell their products in Europe will have no choice but to comply.
Some tech giants see opportunity in creating a partnership with Europe. Google, Microsoft, and OpenAI have signed up to Europe’s AI regulation bill code of practice, viewing adherence as a way of gaining trust, preventing litigation, and aligning worldwide standards.
Others, including Meta, have criticized the EU for overreach and even asked the Trump administration to help them resist Europe’s drive for regulation.
EU AI Act First Regulation on Artificial Intelligence
Back in August 2024, the European Union released the AI Act, the world’s first binding and comprehensive AI law. The act puts tight guardrails on risks ranging from privacy invasions to discriminatory hiring and lending decisions and completely bans the mass use of facial recognition technology for surveillance.
All Trump deregulation policies not only safeguards consumers but also attempts to create a level playing field for European developers who are competing with large US companies.
Trump administration AI policy impulse to free American artificial intelligence from regulatory shackles may ultimately boomerang because global markets are not operated based on American rules alone. As the article mentions, Europe’s AI Act, the first comprehensive republican AI regulation ban proposal could set global standards, as the GDPR did for data privacy.
American companies that seek to access the European market will be forced to comply with such tight protections, regardless of Trump’s vision of deregulation. In the outside world, this would mean that American companies can innovate within the US government AI policy more freely but would have its global extent checked by European regulations for accountability, transparency, and human rights respect.
And if the Brussels Effect in this instance repeats, it would isolate the US and nullify its leadership role in shaping the future of AI around the world.
But Washington is pushing back.
Vice President JD Vance has called the AI Act “excessive,” warning it could stifle innovation. The Republican-led House Judiciary Committee went further, accusing Europe of using content moderation rules as tools of censorship.
In parallel, European politicians have remained firm in their stance, though, and have not diluted their system of regulation even in delicate trade negotiations with America.
The Global Divide
Under pressure from Washington and domestic critics alike, Europe stands firm on its regulatory position. Lawmakers argue that innovation and regulation go hand in hand, pointing to underlying structural issues such as markets fragmented along lines of nationality and manpower shortages as the actual hindrances to European technological development.
Other democracies are following Europe’s lead. South Korea has passed its own version of the AI Act, while countries including Canada, Brazil, India, and Australia are working on similar frameworks. Even China, though motivated by its authoritarian agenda, has put guardrails around EU AI regulation act systems, which shows that regulation is becoming the global norm.
Against this backdrop, Trump deregulation of AI vision looks increasingly like an outlier. The Trump administration AI policy approach may help US companies move quickly at home, but internationally, it risks isolating them from markets that demand strict safeguards.
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