Big Story: Trade uncertainty stalls American innovation
The Trump administration took a positive step on Monday by identifying digital trade barriers in a move aimed at helping U.S. startups navigate international markets. But just two days later, that progress was undercut as President Donald Trump announced a baseline 10 percent tariff on nearly all imports entering the U.S., along with the promise of even higher tariffs on goods from roughly 60 countries. The move will increase costs overall and risks stoking global trade tensions, putting U.S. companies—including startups—squarely in the crosshairs. Startups need a clear and consistent trade agenda that lowers barriers to digital trade, facilitates entry into international markets, and expands opportunities for global success.
The U.S. Trade Representative (USTR) released the National Trade Estimate (NTE) report this week, outlining foreign trade barriers facing U.S. companies. Last year, Engine and a coalition of startup founders explained to USTR that the growing number of digital trade barriers limits startups’ ability to reach users abroad. These barriers—ranging from data localization mandates and platform liability frameworks to sector-specific levies—hit startups the hardest, especially those without the resources of multinational incumbents. The inclusion of digital trade barriers in the NTE report is a positive step towards addressing obstacles that keep startups out of foreign markets and a welcome shift from actions in the last few years that have weakened the U.S. standing in digital trade negotiations.
On the other hand, the administration’s blunt and aggressive moves on tariffs harms startups directly and invites retaliation, which could include digital services taxes, data localization rules, enforcement actions that target U.S. companies, and other barriers that impact startups. Policymakers should prioritize a cooperative trade agenda that lowers digital barriers so that startups can grow and compete globally. Instead of setting off another wave of reactive policy, the U.S. should lead with a clear and consistent strategy that supports startups.
Policy Roundup:
Trump to move student loans to SBA. President Trump announced that the Small Business Administration will oversee the $1.6 trillion federal student loan program, part of his broader plan to dismantle the Department of Education, further complicating an already fraught system. Policymakers must prioritize student loan forgiveness and create a relief plan for borrowers, including startup founders, employees, and those looking to join the startup ecosystem.
Congress discusses facilitating investment in small businesses. The House Committee on Small Business held a hearing on Wednesday to discuss how Congress can help empower investments into small businesses. Policymakers focused on expanding access to the Small Business Investment Company program, including by prioritizing funding to rural areas. Engine has long advocated for improved capital access for startups, particularly those located outside coastal urban hubs.
Bipartisan bill to expand AI resources, bolster innovation. Reps. Jay Obernolte (R-Calif.) and Don Beyer (D-Va.) re-introduced the Creating Resources for Every American To Experiment with Artificial Intelligence Act of 2025, or the CREATE AI Act, to establish a national resource that improves access to and supports AI development. The bill would fully authorize the National AI Research Resource, expanding access to compute resources, data, and educational tools for startups, researchers, and academic institutions.
Government funding program up for reauthorization. The Small Business Innovation Research and Small Business Technology Transfer programs are set to expire in September, giving Congress an opportunity to reauthorize and improve a government funding resource that’s critical for startups engaged in costly R&D. In a new blog post released last week, we called on Congress to reauthorize and reform the program to improve startup access, including by providing clearer feedback on application denials, streamlining the application process, and clarifying the affiliation rule for VC-backed startups.
AI Essentials: What is a foundation model? Foundation models are large-scale AI models trained on vast amounts of diverse data and serve as the backbone for AI applications, providing a base level of knowledge that startups can refine for specific uses. This week, we continued our AI Essentials series with a new blog post, exploring how startups are leveraging foundation models to accelerate innovation and how policymakers should approach AI regulation, given the ecosystem of startups and others building upon them.
On The Horizon:
TUE 4/08: The House Science, Space and Technology subcommittee on research and technology will convene a hearing to discuss Chinese-owned AI model company Deepseek at 10:00 AM ET.
TUE 4/08: The House Committee on Energy and Commerce will convene a hearing to consider 26 bills, including the Tools to Address Known Exploitation by Immobilizing Technological Deepfakes On Websites and Networks Act and the Rural Broadband Protection Act of 2025 at 10:15 AM ET.
TUE 4/08: The House Ways and Means Committee will convene a hearing to discuss the current administration’s trade policy at 10:00 AM ET.
TUE 4/08: The House Committee on Small Business and Senate Committee on Small Business and Entrepreneurship will hold a joint hearing to discuss keeping taxes low for companies.
WED 4/09: The House Committee on Energy and Commerce will convene a hearing to discuss AI innovation and global competitiveness at 10:00 AM ET.
WED 4/09: The House Ways and Means Committee will convene a hearing to discuss trade policy with United States Trade Representative Jamieson Greer at 10:00 AM ET.
WED 4/09: The Senate Committee on Commerce, Science, and Transportation will convene a nomination hearing for Olivia Trusty to be a member of the Federal Communications Commission at 10:00 AM ET.
Startup Roundup:
#StartupsEverywhere: New York, New York. It’s no secret that immigrating to the United States is complicated. Immigration attorneys have many clients from many countries, navigating a variety of legal pathways. Their cases take time to prepare and even longer to be heard. Enter Khalil Zlaou, Tina Zedginidze, John Langhauser, and their product, CaseBlink. This AI software helps attorneys prepare their cases for various visa applications in a fraction of the time. We sat down with Tina to discuss her company, immigration reform, and experience participating in an accelerator program.
