Executive Order

An Executive Order is a written directive from the US President to the agencies of the state. In German, this is often called a Präsidialerlass or Dekret. In it, the President states what ministries and offices should or should not do. Unlike a law, such a directive does not need approval from Congress in Washington. It takes effect the moment it is signed and officially published. Its scope is limited, however: the President may only order what the Constitution or an existing law permits.

Why a stroke of the pen in Washington reaches AI companies

The world’s biggest AI companies are based in the US. These include OpenAI, Google, Microsoft, Meta, Anthropic, and chipmaker Nvidia. When the US government sets rules for these firms, it affects their products worldwide. A user in Germany notices this in which features a chatbot offers and which it doesn’t.

Executive Orders are the fastest tool available to a government. Getting a law through Congress often takes years and frequently fails. A presidential directive is in place within days. That is precisely why US AI policy has so far been made almost exclusively this way.

For investors, this is a risk in both directions. New requirements can make business models more expensive, for instance if companies must have their models tested before release. Conversely, an order can move billions if it speeds up approvals for data centers. Stock prices of tech and energy companies therefore regularly react to such news.

From stroke of the pen to regulation — and back again

The process begins in the White House. Advisors draft the text, the President signs it, and the order appears in the US Federal Register. Only then does it officially take effect. The addressee is always the administration, never the individual citizen directly.

Afterward, agencies must translate the directive into concrete rules. For AI topics, this is often the Department of Commerce and institutes for technical standards. They determine which tests a model must undergo or which chips may be sold abroad. This second step takes months and determines what the order actually means in practice.

There are two important limits. First, courts can strike down an Executive Order if it exceeds the President’s authority. Second, it is not permanent: the next President can revoke it with their own signature. A common misconception is therefore to confuse it with a law. A law survives a change in government; a decree often does not.

AI decrees of recent years

The best-known example is President Joe Biden’s AI order from October 2023. It required developers of particularly large models to report safety tests to the government. Agencies were also supposed to develop standards for watermarks in AI-generated images. President Donald Trump revoked significant parts of it in January 2025 and replaced it with his own order containing fewer requirements.

Such orders also play a role in chip trade. Export restrictions on AI chipsets to China trace back to orders and the agency rules based on them. For Nvidia, this meant the loss of a large market and several sharp price swings in a short period.

In news articles, you’ll usually encounter the term untranslated or as “decree.” Three questions are useful here: Whom does the order bind, which agency implements it, and how easily can it be reversed? The European equivalent, incidentally, is not an Executive Order but the slower route via legislation such as the EU’s AI Act.