President Donald Trump’s executive order aimed at limiting the reach of state AI laws may give customer experience leaders more confidence to scale the technology, but it does not eliminate regulatory risk or governance requirements.
The order, signed in December, directs federal agencies to evaluate and, if necessary, challenge state AI laws that conflict with a national policy framework. While the administration frames the move as a way to reduce regulatory fragmentation, the order reshapes direction rather than replacing existing requirements, according to Shawn Helms, partner at McDermott Will & Schulte and co-head of the firm’s technology transactions and outsourcing practice.
“The EO signals intent, not preemption,” Helms said. “The EO does not preempt state law. And the order does not itself create new AI compliance obligations, but reshapes the regulatory direction and enforcement posture.”
For CX organizations navigating a patchwork of state AI rules, that distinction matters, as the order may encourage broader AI deployment across customer support and marketing, while shifting attention toward future federal standards.
Consistency doesn’t mean clarity
From an operational standpoint, a robust federal framework could simplify AI compliance for organizations operating across multiple states. CX leaders, however, may lose the detailed guidance that state laws had provided in key risk areas.
“If federal preemption moves forward, the change could create operational consistency for organizations deploying AI across multiple states, reducing the compliance complexity that has challenged CX teams,” said Akanksha Ray, director of global policy at Credo AI.
That consistency may also remove specific guardrails that state regulations had established around automated decision-making, data handling and bias mitigation.
“This shift means organizations would need to anticipate where voluntary best practices should exceed baseline federal requirements,” Ray said.
State AI laws remain fully operative during this transitional period and may be contested in court, selectively enforced or politically deprioritized, said Peter Stockburger, office managing partner and head of the U.S. AI team at Dentons. So, companies still need to comply carefully with existing regulations, particularly in areas affecting minors, education and public services.
“CX teams cannot assume immediate relief or blanket preemption,” Stockburger said.
As a result, CX leaders can no longer rely on regulation to define responsible AI use.
“The net effect is that CX leaders need stronger internal governance frameworks rather than relying on a constantly shifting regulatory goalpost,” Ray said.
An adjustment period
Experts expect the order to trigger an initial period of uncertainty as organizations learn more about the policy and await federal action.
“Initially, the executive order may add to the confusion around AI regulation because everyone is trying to react so quickly,” Ibex CTO Michael Ringman said. “But in the longer term, the executive order should provide better governance and lead to more consistent adoption and rollout of AI.”
However, early regulatory attention will likely focus on communications, such as marketing campaigns, especially in highly regulated sectors like financial services and healthcare.
The regulatory burden may also shift from companies to states, as they defend their AI laws against federal challenges. So, organizations will have to decide whether to continue investing in compliance features that could later become optional or obsolete.
Governance expectations remain
Despite the prospect of a more unified regulatory framework, experts warn against treating the executive order as a signal to relax AI oversight.
“CX leaders should prepare for regulatory uncertainty rather than regulatory absence,” Helms said.
Businesses have to understand how they use AI across the customer journey, focus governance on “higher-impact use cases” and ensure meaningful human oversight, Helms said.
Maintaining transparency, fairness and accountability is essential because it reduces risk, regardless of the regulations in place. And consumer expectations will persist regardless of legal mandates.
“Consumer trust doesn't disappear when regulations do,” Ray said.
Organizations should review AI systems built to meet state-level requirements and determine which practices should remain internal standards, experts said.
“Treat this as an opportunity to build governance as a competitive advantage rather than compliance overhead,” Ray said.
Don’t get sidelined
Regardless of the regulatory impact, CX teams must be involved in AI decisions to ensure successful implementation.
“If you look at where decisions are being made with AI today, a lot of the decision-making is being done by CTOs and CIOs,” Ringman said. “People in the customer service space aren't always engaged in those decisions, and that disconnect has already led to many failed AI implementations.”
Ringman likened the current AI moment to the early wave of offshore outsourcing — marked by rapid adoption, high expectations and inevitable missteps.
“We're going to move fast, and there's going to be a lot of ‘oops’ moments along the way,” Ringman said.
For CX leaders, the takeaway is clear: The executive order may lower barriers to scaling AI, but it also makes internal governance, organizational alignment and strategy even more important.
