Tesla, X, and SpaceX CEO Elon Musk’s abrupt rupture with President Donald Trump over the administration’s “One Big Beautiful Bill” threatens to unravel the laissez-faire, Silicon-Valley-led strategy that had guided artificial intelligence (AI) policy since January.

Until last week, Musk was the president’s most influential outside adviser. Musk’s July 2024 endorsement of Trump and sizable financial backing having ushered a corps of technologists into government: venture capitalist David Sacks assumed a new AI-and-crypto remit, former Twitter executive Sriram Krishnan joined the White House policy staff, and a cadre of SpaceX and X alumni took key posts at the freshly created Department of Government Efficiency. Palantir deepened its defense ties to the administration. We will see in the coming months how many of these luminaries will continue to work in Washington, DC. Still, the impact they’ve already had is clear.

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Within five month,s this cohort had dismantled the precautionary AI framework erected under President Biden, converted the AI Safety Institute into a standards-and-innovation center, scrapped an impending expansion of export controls, and preempted state-level efforts to restrain foundation models. These individuals embodied the view that private capital, not federal rule-making, should set the pace of innovation.

Musk’s exit upends that calculus. OpenAI now gains leverage as the sector’s self-styled adult in the room and the beacon of AI innovation. The Office of Science and Technology Policy is poised to reclaim day-to-day coordination, though its wide mandate spans quantum, biotech, and space. This risks diluting the prior innovation focus.

Meanwhile, the MAGA coalition is reverting to its original camps: MAGA 1.0 (the original 2016 base), suspicious of globalist tech, versus neo-libertarian “accelerationists” who regard regulation itself as existentially dangerous. Into this vacuum will probably step the national-security establishment, tightening supply-chain safeguards, reviving Project Maven–style battlefield AI, and refocusing the Administration AI priorities on the AGI race, infrastructure, energy, cybersecurity, counter-espionage, and foreign-influence defenses. Venture capitalist Marc Andreessen once warned that Washington’s impetus to nationalize AI would smother the sector. Yet, the Musk–Trump divorce demonstrates that laissez-faire alone is insufficient for great-power competition: some federal stewardship of safety, testing, and intelligence protection is unavoidable.

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If America thus emerges as the immediate loser in a feud driven more by ego than strategy, at least the rupture also could clarify the path forward: Silicon Valley must continue to push the technological frontier, government must safeguard the commons, and both sides must resist the temptations of populism.

In the long contest with China, pragmatism — not personalities — must rule the day.