The incoming Trump administration is expected to make several policy changes likely to impact tech transactions. President-elect Donald Trump has promised to reduce regulation and cut federal bureaucracy, which he says have suppressed innovation, increased the cost of goods, and caused jobs to shift oversees. He has touted an “America First” focus on domestic manufacturing and supply chain independence, particularly of semiconductor and AI-related technology. The first Trump administration’s track record also offers some predictive insights, though we expect some differences from his first term. The overall effect of these changes could reshape the landscape of tech transactions during the next four years.
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Targeting Regulation
In his first term, Trump pledged that for every new regulation issued, two federal regulations would be permanently removed. In his 2020 campaign, he stated that his administration exceeded that goal by removing eight regulations for every issued regulation, and in the most recent campaign pledged to remove ten for every issued regulation. While few believe Trump can meet this 10-to-1 pledge, many believe, and we agree, that Trump will be slower to adopt new regulations and will repeal Executive Orders issued by President Joe Biden.
A. Approach to AI Regulation
Trump pledged to repeal Biden’s Executive Order 14110, which set a regulatory framework with guardrails on AI development and use. Trump asserted that Biden’s regulations threaten free speech and hinder AI innovation. As part of his next administration’s strategy, Trump announced the appointment of David O. Sacks as the White House A.I. & Crypto Czar. Sacks is expected to play a key role in shaping Trump’s AI policy. While Biden’s AI Executive Orders focused on addressing potential risks of bias in the use of AI, such as in hiring and law enforcement, Trump is instead focused on bias in content moderation, stating that Sacks will “steer us away from Big Tech bias and censorship.” Trump is expected to discard proposed government AI controls addressing diversity and equity, but maintain and potentially strengthen export controls on AI technology and advanced semiconductor chips going to China, continuing the trend of leveraging AI to enhance U.S. national security.
Trump views AI as essential to U.S. competitiveness, stating,
“We have to be at the forefront. It’s going to happen. And if it’s going to happen, we have to take the lead over China.”
The Trump administration’s pro-AI development policies, combined with export controls on AI technologies, are likely to create both opportunities and challenges in technology transactions. Policies aimed at establishing U.S. leadership in AI could spur licensing agreements, joint ventures, and collaborations focused on AI innovation. With less AI regulation in the U.S., companies involved in AI development may see increased opportunities for funding and partnerships, driving activity in the tech transactions space. Regardless, AI regulation outside the U.S. is full speed ahead. For companies operating in Europe, the EU AI Act is already in effect, with enforcement phasing in over the next two years.
It should be noted that AI-related technology transactions include risks beyond regulation. For example, legal counsel will need to ensure proper ownership or license rights and consents for training data, uses of IP and data in AI models and any generated output. For buyers and investors, we also recommend adding robust AI-specific representations and warranties into AI technology transaction agreements to address these risks.
B. Scrutiny of Technology Transactions
Policy and personnel changes at the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”), the U.S.’s primary antitrust enforcers, are also likely to affect the ecosystem for tech transactions. Biden’s FTC challenged several high-profile mergers, including Microsoft’s acquisition of Activision Blizzard, and launched an antitrust investigation into Microsoft’s cloud computing, software licensing, cybersecurity, and AI businesses. Trump is expected to exercise less power in blocking mergers, particularly outside of the health and tech sectors, but Trump’s announcement of Andrew Ferguson as the FTC chair leaves some ambiguity. Ferguson has been vocal about his skepticism toward big tech, particularly its control over free speech and market power. While Trump’s leadership may reduce regulatory barriers for certain mergers, it could give heightened scrutiny to others, such as for big pharmaceutical companies, social media, and other media-focused technology transactions. Trump has also tapped Elon Musk and Vivek Ramaswamy to head a non-agency advisory board, named the Department of Government Efficiency (”DOGE“), to ”dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures and restructure Federal agencies.” While details as to the proposed cuts are limited, the Wall Street Journal has reported that unnamed sources identified the FTC and DOJ as being subject to possible cuts.
President Trump has been critical of the CHIPS Act of 2022 (the “CHIPS Act”), which received bipartisan support when adopted in 2022. The CHIPS Act set aside $52.7 billion for chip research, manufacturing and workforce development in the U.S. In one high profile example, the Act incentivized Taiwan Semiconductor Manufacturing Company (TSMC) to increase investment in a large semiconductor plant in Arizona. Trump, however, has criticized the CHIPS Act as a wasteful giveaway of federal funds, arguing that tariffs (or the threat of tariffs) could better incentivize semiconductor manufacturing in the U.S. Trump also claims that Taiwan “took almost 100%” of the semiconductor industry from the U.S. and in return has not paid its fair share towards its military defense. In addition, Trump may take steps to strengthen enforcement under the Buy American Act of 1933 (“BAA”), which mandates the use of US-manufactured supplies and construction materials on federal contracts. We expect more scrutiny of technology transactions that involve manufacturing of critical technology outside the U.S. or that involve government funds going to entities outside the U.S. Buyers and investors might do well to conduct robust risk assessments and contingency planning, especially for transactions involving high-profile or politically sensitive businesses or non-U.S. stakeholders.
Regardless of federal policy or cuts in the budgets of government enforcement agencies, we expect states and foreign jurisdictions will continue enacting new laws governing AI and data privacy, creating a patchwork of compliance requirements for companies operating across multiple jurisdictions. Even if a comprehensive federal framework were enacted that preempts these state laws, which seems unlikely given Trump’s 10-to-1 pledge to reduce regulation, legal counsel for global businesses must remain vigilant in monitoring legal developments outside the U.S. and tailoring transaction agreements to address evolving global AI and data privacy obligations.
C. Regulation of Cybersecurity
We do not expect the second Trump administration to make private-sector cybersecurity regulation a priority. Instead, voluntary industry efforts and cooperation will likely be encouraged. Despite this anticipated approach, private investment in cybersecurity measures will likely continue to increase. Cyberattacks, particularly ransomware, increasingly target business operations throughout the world. The new Trump administration is expected to focus more heavily on cybersecurity in the national security space, with Trump’s platform emphasizing the protection of critical infrastructure from malicious cyber attackers as a national priority.
Trump previously established the Cybersecurity and Infrastructure Security Agency (“CISA”) in 2018 through the Cybersecurity and Infrastructure Security Agency Act. Subsequently, the Cyber Incident Reporting for Critical Infrastructure Act (“CIRCIA”), enacted on March 15, 2022, authorized CISA to develop regulations requiring critical infrastructure entities to report cyber incidents and ransom payments. These regulations aim to enhance national security and cybersecurity resilience by improving situational awareness, threat analysis, information sharing, and incident response. While CISA is expected to publish the final rule by October 2025, the incoming administration’s priorities could lead to changes in balancing private sector expectations with national security concerns.
Although the president-elect’s platform underscores the importance of cybersecurity vigilance, Trump has historically emphasized reducing regulatory burdens on businesses to promote economic growth. Critics argue that CIRCIA’s mandatory reporting requirements impose a heavy burden on private companies, particularly small and medium-sized enterprises, potentially discouraging incident reporting or collaboration with CISA. Furthermore, potential cuts from the DOGE could impact CIRCIA’s implementation. CISA has faced criticism for overstepping its mandate and becoming overly bureaucratic, making it a possible target for review and reform under the DOGE. While CISA is unlikely to be eliminated, its proposed regulations under CIRCIA may face delays or revisions as part of the incoming administration’s efforts to reduce regulatory burdens and realign federal agency priorities.
While the incoming administration’s focus on voluntary cybersecurity measures may reduce regulatory burdens on private companies, it shifts the onus of implementing cybersecurity protections onto the private sector. This creates a heightened focus on cybersecurity provisions in transaction agreements, including representations, warranties, and indemnities related to data security and increased scrutiny on a company’s data security practices during the diligence stage.
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Patent Policy
During his first administration, Trump appointed Andrei Iancu as director of the U.S. Patent and Trademark Office (“USPTO”), leading to a pro-patent owner policy focused on reducing regulation, increasing patent application filings, and boosting patent issuance, particularly for U.S. filers. Companies with healthy patent portfolios tend to support higher valuations in the tech transactions space, and create opportunities for strategic transactions involving IP assets; however, more patents may lead to more overall risk of patent infringement, a risk that can be difficult to quantify during the diligence phase of a transaction. It is anticipated that Trump’s pick for USPTO director will similarly foster a patent-friendly environment.
What is less clear is how Trump’s views towards China may impact policy at the USPTO. The U.S. and China are members of the Patent Cooperation Treaty, and therefore each is required under the “national treatment principle” to not discriminate against filers from member countries and to provide imported patents the same treatment as domestic patents. It is not clear whether and how the Trump administration might try to discriminate. China is now the largest filer of patent applications globally, surpassing the U.S. in 2010; however, only a small percentage are filed outside China. Nevertheless, the number of US-granted patents originating in China has been growing steadily.
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Policy on IP Infringement and Theft
Trump’s appointment of Peter Navarro as senior adviser for trade and manufacturing signals a renewed commitment to his campaign promise of leveraging tariffs against China. During Trump’s first term, Navarro advocated for aggressive trade measures to counter unfair technology transfer and IP theft by the Chinese government, ultimately leading to tariffs and a trade war with China. Navarro’s elevated role in the second Trump administration underscores the importance of tariffs as a tool to address IP theft and protect American interests in international trade.
In addition, Trump has named Jamieson Greer as the United States Trade Representative (“USTR”). Greer, who previously served as chief of staff to then-USTR Robert Lighthizer during Trump’s first term, is expected to play a central role in designing and implementing tariffs to combat unfair international trade practices, particularly those harming U.S. IP. During the first Trump administration, the USTR conducted an investigation under Section 301 of the Trade Act of 1974, at Trump’s direction, to assess the impact of Chinese trade practices on U.S. IP rights and technology development. The resulting 2018 report detailed extensive unfair practices, prompting Trump to impose tariffs and escalate a trade war with China. Greer was instrumental in advising on these tariffs, and his appointment signals a likely continuation of aggressive trade policies, with the potential for further tariffs following the playbook he helped craft.
The incoming administration’s focus on addressing IP theft through tariffs and other aggressive trade measures is expected to have significant implications for international technology transactions. Companies engaged in cross-border licensing agreements or supply chain arrangements may need to reevaluate their contracts to account for new tariff structures or trade restrictions.
Additionally, the emphasis on tariffs as a tool to counter IP theft underscores the importance of robust IP protection. Legal counsel should anticipate increased demand for renegotiating cross-border agreements and structuring deals that account for trade policy changes.
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Other Policy Changes
Trump also hinted at other policy changes that could significantly impact the tech transactions space, including support for nuclear energy, space exploration, satellite defense technology, adoption of autonomous vehicles, cryptocurrency and broader applications of blockchain technology. We recommend keeping a close eye on developments in these areas.
Legal counsel will need to ensure that tech deal structures are resilient to potential changes in the legal landscape not only under the Trump administration, but also the administrations that follow, which could take a different approach in each of the areas discussed.
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