On July 23, 2025, the Trump Administration released America's AI Action Plan subtitled “Winning the Race”, a document that declares unequivocally that "the United States is in a race to achieve global dominance in artificial intelligence." This document offers a window into how Washington is thinking about AI. It also provides a navigational guideline for charting Nepal’s AI Policy.
The stakes of the race
The American strategy makes one proposition crystal clear: this is not about incremental technological improvements but about securing “global dominance” where “whoever has the largest AI ecosystem will set global AI standards and reap broad economic and military benefits.” The plan envisions AI delivering "an industrial revolution, an information revolution, and a renaissance—all at once."
This winner-takes-all framing signals that the race in Artificial Intelligence is now Washington’s official state policy guiding International Diplomacy and Security.
The soft power battlefield
The plan's third pillar reveals the emerging theatre for AI influence. America explicitly seeks to "export American AI to allies and partners" while working to "counter Chinese influence in international governance bodies." In other words, this goes beyond technological leadership by spreading American AI. Washington hopes to prevent“strategic rivals from making [US’s] allies dependent on foreign adversary technology.”
For Nepal, this means the global technological landscape will now become increasingly polarised. We will likely face intensified diplomatic pressure from both Washington and Beijing,compelling to choose between competing AI technology stacks (i.e. AI hardware, models, software, applications, and standards).
Acting CJ Deepak Raj Joshee to unveil action plan today
Our longstanding policy of non-alignment will face new tests as AI ecosystems become increasingly incompatible. Nepal has set an ambition of deploying international standard digital infrastructure for AI development,as envisioned in Strategy 8.3 of the Draft National AI Policy 2081. But such goals may become increasingly challenging, as even the simple act of deploying a particular AI technology stack could carry serious global diplomatic consequences.
Security through leadership, not restraint
Perhaps most telling about America's approach to AI safety is that rather than embracing the precautionary frameworks like those adopted by theEuropean Union, the US explicitly rejects regulations, viewing them as “onerous”that would “paralyse one of the most promising technologies we have seen in generations.” The American philosophy appears straightforward: if AI poses risks, America must discover and control those risks first.
The plan prioritises“AI interpretability, control, and robustness breakthroughs” over “burdensome”regulatory restrictions. While the focus on AI interpretability or investment into building an AI Evaluation Ecosystem is a necessary and welcomed measure, this represents a fundamental wager by the US that technological solutions and America's market leadership can address AI risks more effectively than any regulatory frameworks.
For smaller nations like Nepal, this creates a policy dilemma.The Plan shows the US clearly aims to push for AI deployment both internally and externally, but without a cautionary approach, the risks of AI will be exacerbated.
Consider this example: the Action Plan identifies risks of synthetic media in the legal system, such as deepfakes presented as evidence. The plan acknowledges that US courts would currently be ill-equipped to handle such evidence that could be easily generated by current frontier-AI models. Yet, the Action Plan will only push the capabilities of these models even further.This raises a question:If American courts will struggle with this challenge, how equipped do we think are Nepal's courts?
Energy as the new strategic resource
One of the most significant acknowledgements in the plan concerns AI's energy demands. "AI is the first digital service in modern life that challenges America to build vastly greater energy generation than we have today," the document states, noting that "American energy capacity has stagnated since the 1970s while China has rapidly built out their grid."
This observation should resonate strongly in Nepal. With our substantial hydroelectric potential and expanding renewable energy infrastructure, Nepal finds itself uniquely positioned in this emerging energy paradigm. The plan explicitly seeks "new sources of energy to power it all" and aims to "embrace new energy generation sources at the technological frontier."
For Nepal, this represents perhaps our most significant strategic opportunity. As global demand for clean, abundant electricity accelerates, nations with surplus renewable energy capacity will possess considerable leverage. Our hydroelectric resources, traditionally viewed as domestic assets, may become geopolitically valuable commodities in the AI era.The question of whether there will be enough demand for additional electricity generated by Nepal has been definitively answered;it will continue to rise, and most likely at an exponential pace.
The regulatory question
The US plan offers an unambiguous position on AI regulation: America will "remove red tape and onerous regulation" and "dismantle unnecessary regulatory barriers that hinder the private sector." This approach might contrastwithEU’s comprehensive AI legislation,but it is still a rejection of the previous plan for a decade-long moratorium on attempts to regulate A.I. by the states.
For Nepal's forthcoming AI Policy, this suggests a need for a calibrated approach: create frameworks that enable innovation while addressing legitimate concerns. The approach of creating regulations which doesn’t "unduly burden AI innovation" while maintaining necessary safeguards would be a good starting point.
Nepal's path forward: Sector-specific excellence
Given these global dynamics, what should constitute Nepal's AI strategy? The answer lies not in competing for general-purpose AI dominance, Nepal (and for the matter, most nations) simply don’t have the capital, infrastructure or talent to compete with the two superpowers. What we must instead focus on is sector-specific deployment and adaptation that can unleash unprecedented productivity and growth.
Looking ahead
It's clear that America's AI Action Plan represents more than a technology strategy;it’s a declaration of a new era of technological competition. For Nepal, this creates both opportunities and challenges that require careful navigation.
Our hydroelectric resources may become more strategically valuable than previously imagined. If the cards are played right, Nepal could be Asia’s Data Centre, powering global AI-transition,but Nepal will also surely face increasing pressure to align with competing digital blocs. The path forward demands careful consideration.
A lot of pressure on Nepal’s new AI Policy, due soon, considering the deadline set in MoCIT’s AI Concept Paper was January 2025.
(The author is a 4th Year B.A. LLB Student at Kathmandu School of Law)
