Trump’s return: the technology policy fallout.
Inferences from Minerva Technology Policy Advisors. Vol.37 - 7 November, 2024
Donald Trump will enter the Oval Office for a second time with a majority vote, the Senate, and possibly the House at his back. Trump’s sweeping victory on November 5th gave him a clear mandate to implement his policy agenda. So what does that mean for the geopolitics of technology?
Artificial intelligence: Trump has promised to rescind the Biden administration’s Executive Order on AI, a sprawling document published in 2023 that handed the federal government a huge to-do list on AI governance; what would take its place is less certain.
Make AI Policy Great Again. One idea could be to harken back to the “American AI” agenda initially put forward by the first Trump administration in 2019. That initiative sought to lower barriers to adoption across the federal government and directed US government agencies to take a light touch on regulation, putting the priority on enforcing existing laws instead of new regulatory frameworks.
Move faster and break through. Trump’s tech-sector backers will be pushing for him to gut policies that they view as unfriendly to startups, like reporting obligations for companies that train very large AI models. The new administration will be more interested in using AI to boost US economic competitiveness and shore up US national security in its geopolitical competition with China.
A sharp pullback by the new administration on AI governance would leave a huge question mark hanging over the future of global AI policy discussions, which have advanced considerably since 2023, under US leadership. The mood music at an upcoming meeting of the new network of AI safety institutes in San Francisco at the end of November will be an opportunity to assess what, if anything, will be left of the multilateral AI safety agenda come January.
Many Democratic-leaning US state legislatures had already been pushing ahead with AI laws amid a perceived lack of action at the federal level. Trump’s return to the White House will galvanize efforts to put in place safety guardrails, and to tackle issues like use of AI by law enforcement.
Technology supply chains: During his first term, the Trump administration slapped technology restrictions on China’s leading technology company and launched a trade war against Beijing. Biden expanded Trump-era restrictions by putting in place broader controls on China’s access to leading-edge semiconductors and other critical technologies.
Not Made in China. Trump has called for 60% to 100% tariffs on Chinese imports, implying he backs his former trade ambassador Robert Lighthizer’s proposal to revoke China’s most favored nation trade status. Steep tariffs across a range of Chinese-manufactured goods, from plastic tchotchkes to computer servers, would be red meat for members of Trump’s base upset about the loss of manufacturing jobs overseas, but would also likely stoke inflation, as many goods made in China don’t have readily available domestic substitutes.
Specifically on more advanced technology; Trump is likely itching for another confrontation with Beijing. China’s recent economic woes and the strong hawkish consensus in Washington may encourage him to double down on his first-term policy of targeting China’s access to US technology, which expanded dramatically under Biden, with new restrictions on China’s access to advanced semiconductors and other high tech goods, data, capital, and knowhow.
Trump may back an escalation to try to clinch a “deal” with Xi Jinping; his more hawkish advisors will be hoping to force a faster decoupling of the US and Chinese tech ecosystems. Either way, companies whose supply chains flow through China should brace for impact. Risks will flow in both directions as China responds to US measures with its own, expanded tech policy toolkit.
Chips on his shoulder. Trump may have a harder time deciding what to do about the CHIPS Act, the lingering flagship semiconductor industrial policy created by Biden, which provides billions of dollars to chipmakers to set up new advanced manufacturing on US soil. While Trump was critical of the act on the campaign trail, reversing course now could be highly disruptive for companies that have made investments off the back of the program, particularly at a time when US chip giant Intel is struggling financially.
Digital sovereignty. Trump’s reelection is likely to reinvigorate the debate about whether Europe is running unacceptable geopolitical risks by relying on US technology. The question, which has been swirling since the 2013 Snowden revelations, grew increasingly urgent for European policymakers after Trump’s coercive trade tactics during his first term led to concerns that a hostile US administration could one day threaten to cut off access to the cloud or to cutting edge AI models in an attempt to gain leverage in an economic or diplomatic dispute.
Biden’s re-engagement with US allies helped mend fences to a degree, but with Trump’s reelection, those concerns will be back in Brussels, Berlin, and Paris.
The upshot? Trump’s courtship of the tech-sector has markets, and cryptocurrencies, cheering his election. It also has China and Taiwan (both of which are economically weaker than in 2016) bracing for renewed disruption. Europe has been scrambling to prepare for Trump to follow through on his promise of tariffs, and to find contingencies if US aid to Ukraine is cut off. With its self-proclaimed ‘unprecedented and powerful mandate’ Trump 2.0 is set to make waves in the geopolitics of tech early and often.