Why Trump’s New AI Action Plan Spells Trouble for the Global South

The Trump administration’s recently announced AI Action Plan marks one of the most ambitious attempts to consolidate global leadership in artificial intelligence. Built on three main pillars — deregulation at home, exporting a US-controlled “AI technology stack” to its allies, and curbing China’s technological rise — the plan is a strategy document shaped by Washington’s own geopolitical thinking. Yet while it may help accelerate US competitiveness, the policy raises serious concerns for countries of the Global South by not meaningfully grappling with the need of lower-income nations, reinforcing their structural dependency and risking regulatory backsliding at a time when climate resilience and equitable development are already under strain.

The plan’s focus on deregulation threatens to deepen the Global South’s exposure to climate vulnerabilities. By rolling back Biden-era safeguards and loosening environmental regulations, such as the permitting process under the Clean Water Act, the US has shown that climate is not the priority compared to gaining a technological lead. This sets a dangerous example. Other countries joining the AI race might feel pressured to lower their own climate standards, thinking that having strict environmental rules will make them less competitive. This could result in a global race to the bottom where climate promises are thrown aside just for the promise of AI gains.

This would be very devastating for the Global South, which is already carrying an outsize burden from the effects of climate change. According to the World Meteorological Organization, more than 90% of all climate-related casualties over the past half-century have taken place in the Global South, and according to the World Bank, changes in climate may displace 143 million people by 2050. From severe flooding in South Asia to unprecedented droughts in East Africa, many of these countries don’t have the infrastructure and resources needed to handle such crises.

The US’s deregulation push also stirs up more immediate problems, particularly concerning AI’s huge infrastructure needs. Data centers — core to AI progress — are extremely resource-hungry, needing significant energy and water. A 2023 study by the Environmental and Energy Study Institute non-profit found that a single large data center may use as much as 5 million gallons of water per day for cooling, often in locations already short of water.

In countries like India, South Africa, and Brazil, water scarcity is already a big issue. As Shruti Kapil notes in her study on India’s water security that over 600 million Indians face high to extreme water stress, with 200,000 deaths annually due to inadequate safe drinking water. Water shortages are already common across parts of Asia, Africa, and Latin America. Encouraging water-intensive data centers without strict environmental oversight will likely only make the issue worse. For the Global South, where basic services are often disrupted due to water and energy shortages, this kind of unchecked AI expansion is a major threat.

Additionally, the plan will make economic inequality worse by ignoring the Global South in its export strategy. The words of the plan are clear: US AI exports are for “allies and partners” and “likeminded nations” — not developing ones. This means that the specific needs of Global South — like affordable tech access, local skills training, and labor protections — likely won’t figure into US planning. Still, US-developed AI tools will come to these markets indirectly via multinationals and domestic groups linked to American suppliers.

These big companies will bring AI first, automating their processes and gaining more market power, while small and medium-sized enterprises (SMEs) struggle to keep up. This is dangerous because SMEs provide a majority of jobs in many Global South economies. In Brazil, a 2023 OECD survey found that 86% large companies used some form of advanced digital technology, but only 64% medium firms and just 42% of small businesses did. This gap shows that larger corporations are better placed to use AI, while SMEs don’t have the capital, infrastructure, or trained workers to compete with them. Without proper help, these SMEs will keep falling behind, leading to job losses and more market concentration.

Apart from inequality, these transitions come at a time when the global share of income derived from labor is declining, partly because of automation, AI, and the rise of “superstar firms,” according to the International Labour Organization (ILO). The labor share of global GDP fell from 52.9% in 2019 to 52.3% in 2022, continuing a longer-term decline of 1.6 percentage points since 2004. This decrease is even more pronounced in Africa, Latin America, the Caribbean, and the Arab world — places where labor laws are weak and institutions are fragile, offering little resistance to fast technological changes.

Unlike previous waves of industrial development, AI is not merely a tool to support human productivity — it has the potential to act like an autonomous agent that fully replaces human decision and function. Earlier advancements, like the assembly line or textile machines, gave benefits over time as they became more widely available. But AI is different, potentially replacing white-collar and service jobs altogether — even in law, finance, and education. This means that Global South workers will suffer not only from a lack of access to the tools but also from their unequal adoption. If local institutions are not ready — lacking re-skilling programs, meaningful labor protections, and digital rules — AI could deepen joblessness, cause political instability, spark populism, and stress already weak governments. In this way, AI becomes not only an economic issue, but a governance challenge too.

This trend is made worse by the plan’s aim to block China from offering alternative AI sources. Through large export bans on chips and software, Washington is holding back China’s technological rise while limiting the choices countries in the Global South have. This trap means developing countries could be left out from receiving US cooperation while also losing access to China’s affordable tech. The outcome becomes the same: more dependence, and less economic safety. In turn, Global South nations will increasingly rely on multinationals and local elites connected with the US AI world to maintain pace, leaving behind local innovators and SMEs.

Combining AI supply chains inside a US-controlled tech stack also brings big risks. Countries that might want to balance US and Chinese tech to maintain political neutrality or lower cost could see this option disappearing, making them more reliant on single power. That is risky because the US has a long history of using tech control to push its foreign policy goals, including in urging NATO allies to drop Russian defense systems.If even supposed allies can be blocked from accessing key tools, other Global South states may face bigger risks.

This risk grows from the fact that while expanding AI deployment can take a long time, cutting off access can happen in an instant. Because of this, Global South governments may feel forced to support US policies even when not in their best interest, just to prevent tech cutoffs. This is what weaponized dependence looks like, and America’s AI Action Plan proposes to wield it to the detriment of the Global South

Instead of just accepting the outcome of this US-China AI fight, Global South countries must build up their own long-term plans for digital independence. That means rejecting the idea that only two choices exist, and instead shaping their own laws, protecting their labor, and innovating on their own terms. The AI era provides a rare chance to not repeat extractive models of older industrial revolutions. It must not be wasted repeating past dependences. In this fight, the Global South cannot be a place of passive tech adoption — it has to be a space where justice, fairness, and autonomy are fought for.