Artificial Intelligence (AI) is the most transformative technology of our generation. It promises to unlock trillions in economic value, revolutionize critical sectors like healthcare and energy and secure America’s competitive edge on the global stage. President Trump himself rightly recognizes this. This week, he wrote on Truth Social: “Investment in AI is helping to make the U.S. Economy the ‘HOTTEST’ in the World.” Yet, as our innovators sprint toward this future, the President also pointed out that a shadow is falling over the path: the looming threat of a regulatory patchwork of 50 different governing regimes.
Right now, state legislatures are racing to pass AI laws. In 2025 alone, over 1,100 AI-related bills were introduced. This fragmented approach is not responsible oversight for a technology that crosses borders; it is a direct threat to the American innovation ecosystem. NetChoice strongly urges Congress to act immediately by implementing a temporary pause on state-level AI regulations so it can create a stable, national framework, while still allowing states to protect consumers and children from abuses of AI tools. Without this intervention, we risk ceding our Golden Age before it has even begun.
The Hidden Cost of 50 Different Regulatory Regimes
The economic damage resulting from a fragmented regulatory landscape is not speculative; it is quantifiable and catastrophic. When businesses operate nationwide, they are effectively bound by the most restrictive state law, creating an “interstate innovation tax” that small businesses simply cannot afford.
Consider the data gathered from various experts:
- A National Economic Shock: The U.S. Chamber of Commerce, drawing on analysis of Colorado’s restrictive SB-205, warns that extrapolating such a model nationwide could lead to the loss of 713,000 jobs and $53.7 billion in GDP by 2030. A single state’s policy choice risks slowing national productivity by one percent, costing the economy dearly. The state of Colorado itself is projected by the Common Sense Institute to lose 40,000 jobs and $7 billion in economic output by 2030 due to its policy.
- Crushing Small Businesses: For the small tech firms that are the backbone of our economy, the uncertainty is paralyzing. Research shows that 65% of small businesses are concerned about rising litigation and compliance costs from conflicting state laws. Faced with this complexity, one-third of small business owners stated they would scale down or stop using AI altogether, sacrificing the efficiency gains that allow them to compete with industry giants.
A fragmented approach means companies must divert resources from research and development for consumers to navigating bureaucratic red tape. This is a tax on innovation, and it’s not one America can afford.
The Startup Struggle: A Warning from Abroad
We don’t have to guess what happens when regulation takes precedence over innovation; we only need to look across the Atlantic. The “regulate first, innovate later” approach adopted by the European Union (EU) and the United Kingdom offers a sobering case study, as highlighted by a survey from The App Association (ACT).
U.S. startups and mid-sized businesses enjoy greater flexibility, leading to deeper AI integration (62% of U.S. tech small businesses use AI vs. 50% in the EU/UK). Meanwhile, their European peers face significant delays and costs. The survey found that EU/UK tech small businesses lose, on average, between $109,000 and $375,000 annually per firm from regulatory-driven delays in accessing frontier AI models and launching products. In fact, nearly 60% of developers in those regions report regulation-driven launch delays, often forcing them to strip or downgrade features simply to comply.
Europe’s recent record on innovation and investment has been so disastrous that the EU is now in the process of trying to scale back its formerly signature policies around data and AI. In America, we still have the chance to ensure regulation is a manageable check, not a brake. State-level fragmentation, however, risks pushing the U.S. toward the European model of stifled growth and lost opportunity.
Winning the Future: Doubling Down on Permissionless Innovation
As Adam Thierer of the R Street Institute has rightly argued, the reason America dominates the global digital landscape is our historical commitment to permissionless innovation. Today, the stakes are even higher. We are in a technological competition with geopolitical rivals, most notably China. Winning this race is not just about economic advantage; it’s about ensuring the future of free speech and Western values are embedded in the world’s next generation of technology.
Congress must not let a patchwork of restrictive state laws or archaic federal regulations “smother this technology in its cradle.” By creating conflicting rules that make compliance infeasible, states are setting up an environment where only the largest corporations will be able to operate, sidelining the very startups and small businesses that drive disruptive innovation.
NetChoice’s Call to Congress
Congress has the authority and the responsibility to establish a clear, national baseline framework that sets reasonable guardrails that protect consumers and children while preserving America’s culture of innovation.
To protect our economic competitiveness and technological leadership, Congress must implement a temporary federal pause on state AI legislation. Let’s reject fear, reject fragmentation, and double down on the freedom to innovate. America’s Golden Age depends on it.