Commerce Secretary Howard Lutnick said AI company Anthropic is ‘back on the right side’ with the Trump administration, signaling a thaw in what had been a contentious relationship between the government and one of America’s leading artificial intelligence firms.

The announcement, first reported by Axios and covered by the New York Post, comes months after Defense Secretary Pete Hegseth blocked Anthropic from certain military contracts because the company refused to allow the US to use its Claude AI models for domestic surveillance or autonomous weapons. Anthropic subsequently sued in California court.

On August 27, a US judge sided with Anthropic in the dispute, ruling that the Pentagon’s blacklisting of the company was unlawful. The ruling appears to have paved the way for reconciliation.

Anthropic co-founder Tom Brown appeared on stage with Lutnick at a tech-focused G20 event in North Carolina on September 2, where Brown stressed the importance of data centers and urged officials to grant permits to build them in their countries.

The reconciliation has significant implications for New York’s growing AI sector, where Anthropic maintains a presence alongside competitors like OpenAI and Google. The company’s Claude AI models are widely used by New York-based financial services firms, media companies, and technology startups.

The dispute between Anthropic and the Pentagon had created uncertainty for businesses that rely on the company’s AI tools, particularly those with government contracts. Some defense contractors had expressed concerns about using Anthropic products while the company was at odds with the military.

Lutnick’s comments suggest the administration is prioritizing AI competitiveness over the earlier disputes. The Commerce Department and Anthropic did not immediately respond to requests for comment.

The rapprochement comes at a critical time for the AI industry, which is facing increasing global competition from Chinese companies like DeepSeek and Z.ai. The Trump administration has emphasized AI development as a national security priority, arguing that American firms must maintain their technological edge over foreign rivals.

For New York’s tech ecosystem, the resolution removes a cloud of uncertainty that had hung over one of the sector’s key players.