Startup News Digest 03/20/26

The Big Story: Lawmakers join refrain for permanent duty-free digital trade

Bipartisan leaders of the House trade subcommittee underscored at a hearing this week the importance of making permanent a global trade policy essential for startups at risk of expiring later this month. That policy—the World Trade Organization (WTO) moratorium on customs duties on electronic transmissions—has been periodically renewed since its 1998 conception and prohibits tariffs on digital goods and services, like software. At the 14th WTO Ministerial Conference later this month, policymakers from around the world will need to decide whether to extend the moratorium again, allow it to lapse, or take the more durable step of making it permanent—the preferred outcome of U.S. startups and the U.S. government alike. 

The e-commerce moratorium is a foundational Internet and international trade policy. Without it, countries could begin to impose tariffs on digital trade, fracturing the global trade landscape and creating new trade barriers for U.S. startups to navigate. As they prepare for the ministerial conference, the Trump administration has made permanence a priority—rather than per-ministerial conference renewals—which would give startups the certainty they need to plan global expansion. Both trade subcommittee Chair Adrian Smith (R-Neb.) and Ranking Member Linda Sánchez (D-Calif.) echoed this priority, with Sanchez highlighting how the moratorium “strengthens American innovation and helps ensure that U.S. entrepreneurs, especially small businesses, can compete globally.”

Despite broad support from U.S. policymakers and allies around the world, making the moratorium permanent may prove to be an uphill battle. The WTO operates on consensus, meaning any opposition from even a small number of countries—like India or South Africa—can block broadly-supported outcomes, which many often use as leverage to achieve their own priorities. Other countries have said in the lead-up they are skeptical of making the moratorium permanent, even if it has been in place for almost three decades. While a short-term renewal would be better than a lapse, continued uncertainty—revisiting this issue every few years—acts as its own tax on growth, making it harder for startups to plan for global expansion.

Policy Roundup:

SBIR reauthorization heads to the president after House passage. The House passed legislation on Tuesday to reauthorize the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs after a five-month lapse, restoring a critical source of non-dilutive funding for early-stage R&D. The measure now heads to the president’s desk after passing in the Senate earlier this month. The bill makes important updates—including a new Strategic Breakthrough track to help bridge the gap between research and commercialization—and policymakers should continue working to strengthen the programs’ accessibility and long-term stability.

Bipartisan bill aims to better understand challenges facing AI startups. Rep. Suhas Subramanyam (D-Va.) and Jay Obernolte (R-Calif.) introduced the Small AI Innovators Empowerment Act this week, a bill directing a study of the key challenges and factors impacting U.S. “small artificial intelligence businesses”—startups—innovating with AI. The bill will help policymakers  understand startup realities—how they raise money, the tools they use to build with AI, the role of exits in the ecosystem, and more—empowering them to draft better policy and support startup success.

White House releases national policy framework on AI. This week, the Trump Administration released a national AI policy framework outlining legislative recommendations across issues including online safety, intellectual property, workforce development, and small business innovation, with a focus on establishing a federal standard that preempts a patchwork of varying state laws. Startups are driving innovation across the AI ecosystem, but risk being disproportionately burdened by fragmented regulation. A balanced federal approach to AI—paired with investments in talent, R&D, and access to resources—is critical to support startups  building, deploying, and competing in the AI ecosystem.

House weighs extension of controversial government spying program. House Speaker Mike Johnson (R-La.) is preparing to bring an 18-month extension of Section 702 of the Foreign Intelligence Surveillance Act to the House floor as the April 20 expiration date approaches that does not include needed reforms sought by industry and civil liberties advocates. Section 702 allows the government to collect Internet communications targeting non-U.S. persons abroad and the last reauthorization of the program greatly expanded the types of entities covered by the program. That expansion should be dialed back. The program has also historically caused problems for U.S. startups because it has been at the center of international legal challenges that ended in disrupted cross-border data flows relied on by startups.

On the Horizon: 

WED 03/25: The House Judiciary subcommittee on courts, intellectual property, artificial intelligence, and the Internet will convene a hearing to examine oversight of the U.S. Patent and Trademark Office at 10:00 AM ET.

WED 03/25: The House Financial Services Committee will convene a hearing to examine tokenization and the future of securities, including efforts to modernize U.S. capital markets, at 10:00 AM ET.

THU 03/26: The Federal Communications Commission will convene an open commission meeting at 10:30 AM ET.

Startup Roundup:

#StartupsEverywhere: New York, NY. Ben Hills is a lifelong entrepreneur seeking to improve the procurement process without compromising the bedrock of standards and regulations that make public works projects reliable and trustworthy. His startup, Iris, provides an AI agent that converts the days and months of request for proposals (RFPs) applications and reviews of those applications into hours of work. We sat down with Ben to talk about his experience hiring talent in the startup ecosystem, the future of the human workforce, and more.