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What Trump’s Infrastructure Announcements Mean for States

The Trump White House has ordered a pause on infrastructure spending approved during the last administration, and is promoting new spending on digital infrastructure to support artificial intelligence.

A busy freeway on a sunny day.
Among a flurry of first-week announcements and executive orders, President Donald Trump is signaling a major shift in federal infrastructure policy.
Helen H. Richardson/TNS
In Brief:

  • President Donald Trump signed an executive order directing federal agencies to pause funding from two infrastructure bills adopted during the Biden administration.

  • Transportation officials are working to interpret the order, but say it’s not intended to pause spending from all programs.

  • Trump is also backing a private effort to invest billions in AI infrastructure.


Among a flurry of first-week announcements and executive orders, President Donald Trump is signaling a major shift in federal infrastructure policy.

In an executive order signed Monday, Trump directed government agencies to “immediately pause the disbursement of funds appropriated through the Inflation Reduction Act [IRA] of 2022 … or the Infrastructure Investment and Jobs Act [IIJA],” two of the Joe Biden administration’s signature legislative achievements. Those laws have directed billions of federal dollars to states and cities for projects ranging from highway expansions to electric vehicle infrastructure, water system upgrades, and investments in manufacturing.

It’s unclear what the immediate impact of the executive order will be, given that the spending was approved by Congress. Legal precedent holds that the president cannot block congressionally approved spending. But even a slowdown in federal payouts for planned infrastructure projects could have ramifications for state and local budgets.

“The safe move [for agency administrators] is to be cautious here and listen to the letter of the executive order,” says Adie Tomer, a senior fellow at Brookings Metro, a liberal-leaning think tank. “There is reason to expect that many states and localities, irrespective of their cash reserves and risk tolerance, are going to stop projects or halt them temporarily. And that could have real costs.”

State and local transportation officials are working to understand the implications of the order. Jim Tymon, executive director of the American Association of State Highway and Transportation Officials, says the language of the order appears to affect all of the programs included in IIJA, which includes the vast majority of highway funding allocated to states. But based on conversations the group had with both agency officials and Trump administration officials, Tymon says the order is targeted at a small subset of programs, namely those aimed at promoting electric vehicles.

“Our members were immediately concerned that this was going to impact all of their highway formula dollars or transit formula dollars,” Tymon says. “That appears not to be the intent, based on the conversations we’ve had with the Trump administration.”

Successive presidential administrations try to put their stamp on infrastructure spending through rules and regulations in addition to legislation. Trump framed the executive order as an effort to “terminate the Green New Deal,” a progressive agenda for infrastructure investment and climate action that was never implemented by name.

While the broad spending allocations of the IIJA and the IRA were approved by Congress, the Biden administration also created additional guidelines for granting funds meant to promote equity goals. Undoing those regulations could be part of a broader agenda of the new administration of rooting out diversity, equity, and inclusion-related efforts in federal agencies. For example, the Justice40 Initiative, part of an executive order Biden signed during his first week in office, is meant to direct a portion of the benefit of federal investments to disadvantaged communities.

“Many could argue, justifiably, that that didn’t have any basis in statutory language,” says Judge Glock, a senior fellow at the conservative-leaning Manhattan Institute.

At the same time that the administration was announcing a pause on federal infrastructure spending, it was promoting a plan by private companies to invest billions more in digital infrastructure. On Tuesday, after teasing a “massive infrastructure announcement,” Trump appeared at the White House with three tech industry leaders to celebrate new investments in data centers to promote the development of artificial intelligence technology. The project, called Stargate, involves an investment of up to $500 billion — though some of Trump’s closest allies have cast doubt on the figure — from a consortium of private companies, including SoftBank, OpenAI, Oracle and MGX.

While the funding for the projects is private, Trump said on Tuesday that he plans to “help a lot through emergency declarations.” On his first day back in office, Trump declared a national energy emergency, with the goal of expediting approval of certain energy projects, particularly fossil fuel facilities. Those moves would benefit the development of new data centers, Trump suggested on Tuesday.

“They have to produce a lot of electricity and we’ll make it possible for them to get that production done very easily,” he said.

Tech leaders and officials are hopeful that AI will help produce a broad range of social benefits, from more economic productivity to health-care breakthroughs. At the White House on Tuesday, Larry Ellison, the CTO of Oracle, described the potential for creating individualized vaccines for cancer powered by AI. Nations are competing to promote AI development.

“There’s a race. That’s the big tailwind here,” says James Pethokoukis, a senior fellow at the right-leaning American Enterprise Institute.

The first round of data centers under the Stargate project are already in development in Texas. While it isn’t clear exactly what rules or requirements will be waived for the data center projects, the administration is planning to promote industrial development through deregulation. People from a range of political ideologies have been calling for years for permitting reform to speed up infrastructure development. The Trump administration’s approach to the Stargate project could prefigure a broader shift in policy that could change the way local communities, state governments and the court system influence infrastructure development.

“A one-off set of waivers does not a national policy make, but this is absolutely an area to watch,” says Tomer.

Artificial intelligence, along with other complex computing tasks like cryptocurrency mining, require vast amounts of electrical power. The growing energy demand from data centers has created implications for the environment and for local, state and national climate goals that are only beginning to come into view. Already the demands have resulted in the extension of existing fossil fuel-burning power plants and the development of new ones, as the Frontier Group, an environmental think tank, outlines in a report set to be published on Thursday.

“The impact of AI on the energy system and on the climate is not some future distant threat,” says Tony Dutzik, a policy analyst with the group. “It is actually happening now, and it’s changing infrastructure and investment decisions as we speak.”

Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.