Key issues — like who should decide regulations, how to balance the push for innovation with the potential risks and how to best compete with China — have not fallen cleanly along party lines, occasionally dividing President Trump and his fellow Republicans.
As Washington, D.C., heads into 2026, battles over state preemption efforts, export controls on advanced chips and the data center boom are likely to remain at the forefront, while the midterm elections and growing frustrations with international tech regulations could add new layers to AI debates.
Here are the key fights to watch next year:
State preemption
The battle over whether the federal government should preempt state AI laws became a central issue in 2025, as states forged ahead with efforts to regulate the technology while Trump and his allies pushed for a more a hands-off approach to regulation.
"This administration doesn't want AI to be regulated except into the minimum degree, and so there's going to be some tension between states that wish to do further regulation and the federal government that doesn't," Appian CEO Matt Calkins told The Hill.
GOP lawmakers initially attempted to include a 10-year moratorium on state AI laws in Trump's tax and spending bill this summer, but the provision was stripped out by the Senate after facing pushback from other Republicans.
Another push to include a preemption provision in the National Defense Authorization Act (NDAA) in late November similarly fell short, despite Trump's public support for the effort.
He has since forged ahead on his own, signing an executive order in early December that calls for the creation of a task force to challenge state AI measures in court and for a policy limiting broadband funding to states with AI laws deemed overly burdensome, among other directives.
The issue has exacerbated existing fault lines within the GOP, dividing Trump from some of the more populist members of his own party, like Rep. Marjorie Taylor Greene (R-Ga.) and his former adviser Steve Bannon.
This fight seems far from over, as Democratic-led states appear likely to sue over the executive order, which legal experts have warned may face an uphill battle in court.
"I wouldn't be surprised if states that want to regulate AI essentially dare the administration by continuing to move forward with that," added Andrew Lokay, a senior research analyst at Beacon Policy Advisors.
International regulations
The Trump administration has been feuding with key U.S. partners in recent months over efforts to regulate American tech companies — a dispute likely to spill over into the world of AI.
Trump and other White House officials have repeatedly slammed allies over various fines and taxes against U.S. tech firms, threatening to suspend trade negotiations or hit countries with additional tariffs in response.
The European Union (EU), in particular, has stoked the president's ire with its landmark tech laws, the Digital Services Act and Digital Markets Act.
The bloc has relied on these and other regulations to levy large-scale fines against Apple, Meta, X and other U.S. tech firms.
Its recent fine against Elon Musk's X, which faces a $140 million penalty over its blue checkmark system and other transparency concerns, faced widespread condemnation from Trump world.
U.S. Trade Representative Jamieson Greer warned in mid-December that the administration could respond with "fees or restrictions on foreign services," highlighting several European companies that he argued have received "expansive market access" in the U.S.
"If the EU and EU Member States insist on continuing to restrict, limit, and deter the competitiveness of U.S. service providers through discriminatory means, the United States will have no choice but to begin using every tool at its disposal to counter these unreasonable measures," Greer wrote on X.
As the bloc moves ahead with its sweeping AI law, known as the EU AI Act, it appears set to collide with a Trump administration focused on light-touch regulation, though the EU proposed delaying several provisions of the law in November.
"Europe wants to regulate AI more than the U.S. does, and specifically, Europe wants to regulate AI companies, and most of those are American," Calkins noted.
Check out the full report later this week at TheHill.com.
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