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Axios Sneak Peek

Welcome to Sneak Peek, our weekly lookahead for both ends of Pennsylvania Avenue, plus the cream of the Sunday shows. I'd love your tips and feedback: jonathan@axios.com.

Please urge your friends and colleagues to join the conversation by signing up for Sneak Peek and the other Axios newsletters. See you all week in the Axios STREAM, and next Sunday evening in Sneak Peek.

1 big thing: Trump's potentially explosive China play

The big sleeper issue in the U.S.-China relationship: cars.

Senior White House officials are quietly preparing to confront China over what they consider unfair handling of automobiles, one of the world's largest industries. It's a move that could profoundly disrupt relations between the superpowers.

Watch for the issue to pop in President Trump's talks next month with China's Xi Jinping.

What you need to know:

  • When U.S. automakers sell in China, they are met with import tariffs of 25%. That's why 96% of the 27.5 million vehicles sold in China last year were built there.
  • When U.S. automakers like GM build in China, they are required by law to form joint ventures with Chinese companies. Those Chinese companies must own 50% or more of the venture.
  • By contrast, the U.S. imposes tariffs of just 2.5% and lets foreign car companies own their entire U.S.-based operations.
  • U.S. companies have swallowed these rules since the '90s because the Chinese market is so lucrative. But Trump and his top nationalist-minded advisers — Steve Bannon, Stephen Miller and Peter Navarro — believe the status quo is unacceptable.

The White House's calculus: China currently exports very few cars to the U.S., but it's itching to sell dramatically more. Trump is perfectly positioned to negotiate the terms of China's market entry. He's got plenty of leverage with tariff levels and ownership restrictions — though the Trump folks are still hashing out their negotiation strategy.

A playbook for Trump: Michael Dunne, an authority on the Chinese auto market, has three rules — from his book "American Wheels, Chinese Roads" — for American negotiators to deal with China:

  1. If the Chinese want to sell their cars to Americans, they must invest in plants in America.
  2. Chinese companies will be free to own 100% of their operations in America — provided that American car companies get the same rights in China. If the Chinese refuse, then America will reciprocate.
  3. Profits from operations stay inside the United States. Repatriation to China will be limited and will require approvals from the the U.S. government.

2. Crossroads at Pennsylvania Ave.

"Fox News Sunday" host Chris Wallace called this week a "critical crossroads" for the administration on Russia, the president's Supreme Court nominee and dismantling Obamacare.

Essentials:

  • Obamacare changes: The key moment on "Fox News Sunday" was when Wallace showed Paul Ryan a graphic of how the current House plan would hurt low-income seniors. Ryan replied that he's looking at changing the healthcare bill to offer "additional assistance to people in those older cohorts."
  • Trump's budget blues: Trump has zero chance of getting his 20% cut to the National Institutes of Health. Ryan told Wallace the medical research body is "particularly popular in Congress." Sen. Susan Collins called the NIH cuts "disturbing" in her interview with NBC's Chuck Todd on "Meet the Press."
  • Alternative facts: Ryan told Wallace he was on track to pass healthcare. Conservative Sens. Rand Paul and Ted Cruz beg to differ. Paul told ABC's "This Week" that House leaders are "flat-out false in telling us, oh, you guys ran on this plan." Cruz on CBS' "Face the Nation" called phase three of the GOP leaders' health care package — the bills that have to be passed separately — "the sucker's bucket," because they won't get 60 votes.
  • Inconvenient intelligence: House Intelligence chair Devin Nunes confirmed on Fox that the Justice Department report refutes Trump's wiretapping claims. FBI director James Comey testifies before Nunes' committee tomorrow and will likely say the same thing — his long-awaited public commentary on the allegations.

3. Obamacare replacement: Final countdown

After showering attention on conservatives, the healthcare whip team is turning focus to the moderates who worry Ryan's healthcare plan will hurt their elderly constituents.

Steve Scalise's whip team met with a couple dozen members of the Tuesday Group on Thursday, but these House moderates couldn't agree on what they'd need from leadership to get to "yes." They're fed up with being taken for granted on tough votes and they're worried that they'll take a tough vote for the team only to watch the bill die in the Senate.

The count: Everybody knows it's going to be extremely tight. A Freedom Caucus source says "short of some major change — which we are being told won't come — the bill does not have the votes." Leadership hopes pressure from Trump and Steve Bannon — who texts regularly with Freedom Caucus leader Mark Meadows — can sway conservative holdouts.

What's next: A full court press, with a mixture of public advocacy (Trump's rally in Kentucky tomorrow) and private cajoling. Vice President Pence and HHS Secretary Tom Price are making last-minute pitches to reluctant members. Price meets with conservative movement leaders tomorrow and key industry groups later in the week.

What's on the table: Leadership will likely offer more generous tax credits to seniors and are considering buying off moderates with a reserve fund that would be used in the Senate to boost up the tax credits. But that risks solidifying the remaining Freedom Caucus members against the bill.

4. Hot in the West Wing

Top West Wing officials are avidly reading and passing around a dissent by Judge Jay Bybee of the Ninth Circuit making the case for the president's authority to issue the travel ban:

"We are judges, not platonic guardians. It is our duty to say what the law is, and the meta-source of our law, the U.S. Constitution, commits the power to make foreign policy, including the decisions to permit or forbid entry into the United States, to the President and Congress."

The president's aides say the dissent crystallizes their view of the role of the federal judiciary and power of the executive.

It's a good forecast of the arguments the team will make both in court and in the court of public opinion. Don't be surprised if the dissent gets mentioned in Gorsuch's confirmation hearing tomorrow.

But the dissent isn't all good news for the president. At the end of it, Bybee chastises Trump (without naming him) for his attacks on federal judges: "Such personal attacks treat the court as though it were merely a political forum in which bargaining, compromise, and even intimidation are acceptable principles."

1 fun thing: Meme-ing Miss Blueberry

The internet is getting a major kick out of Olivia Nuzzi's New York mag cover story on Kellyanne Conway. Nuzzi reports that Conway picked berries as a child in New Jersey and now answers to the Secret Service codename "Blueberry." This news — of course — inspired memes...

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Nikki Haley's "personal conversation" with Trump

President Donald Trump and U.S. Ambassador to the United Nations Nikki Haley at Trump's National Golf Club in Bedminster, N.J. (Pablo Martinez Monsivais / AP)

U.S. ambassador to the U.N. Nikki Haley told CNN today that she had a "personal conversation" with President Trump about how he handled the fallout from Charlottesville, per Politico.

"Well, I had a personal conversation with the president about Charlottesville, and I will leave it at that," Haley said on CNN. "But I will tell you that there is no hate in this country. I know the pain that hate can cause, and we need to isolate haters, and we need to make sure that they know there is no place for them."

On "Good Morning America," Haley brought up her conversation with Trump again, adding that her message was "taken very well." As for whether Trump believes he was in the wrong with his response? "The president clarified so that no one can question that he's opposed to bigotry and hate in this country," said Haley.

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Chelsea Clinton wants Barron Trump to have a "private" life

AP

Chelsea Clinton defended fellow first child, Barron Trump, on Twitter Monday after a Daily Caller reporter criticized the 11-year-old for his fashion choices.

The critique: "The youngest Trump doesn't have any responsibilities as the president's son, but the least he could do is dress the part when he steps out in public," entertainment reporter Ford Springer wrote in the Daily Caller.

Clinton's kickback: "It's high time the media & everyone leave Barron Trump alone & let him have the private childhood he deserves" she tweeted, linking to the story.

Why it matters: Clinton, who has otherwise been known to rail against Trump and his administration on social media, has come to Barron's defense on several occasions. Twice she's tweeted that Barron deserves the right and the privacy to be a kid.

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Former Uber exec will be H&R Block's next CEO

Photo courtesy of H&R

Jeff Jones, the former Target CMO who spent just six months at Uber as its president of ride-sharing, will be H&R Block's next CEO, starting in October, the company said today.

  • Despite the enthusiasm around Jones' hiring last year, his departure was less positive. He left amid a flurry of controversies bubbling at Uber, including allegations of sexual harassment and discrimination within the company, and shortly after it announced plans to hire a COO.
  • Jones on his departure: "It is now clear, however, that the beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber, and I can no longer continue as president of the ride sharing business."

Jones is not the only Uber executive to leave the company in the last six months. Others include its head of finance, head of its AI labs, its head of product and growth, its PR chief, and several employees from its self-driving car teams — including Marakby's boss, former head of Google Maps Brian McClendon.

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Blue Apron faces shareholder lawsuits

Bree Fowler / AP

Blue Apron, the meal kits company that went public in June, has been hit with multiple shareholder lawsuits. They allege that the company misled investors about its business prior to going public, although only two suits have been formally filed, Axios is told. Now, these investors are angry and want their money back.

Tough crowd: Despite being a media darling while a private company, Blue Apron has had a tough time on the markets since going public — its stock price is now nearly half of what it was at the IPO. The company is also facing competition from Amazon, which recently debuted its own meal kits business, which investors claim Blue Apron knew and hid.

Amazon declined to comment on the lawsuits.

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Uber adds new options for driver flexibility

Eric Risberg / AP

Over the last few months, Uber has been on a campaign to repair its relationship with drivers via changes to its policies and service. This time, it's trying to make their driving more flexible thanks to new options in their mobile app, such as setting a trip arrival time if they need to be done by a certain time to pick up their kids from school, and notifications before long trips, for example.

  • In the last six months, it's become clear to the company that it needs to take a friendlier approach in many aspects of its business, including its relationship with drivers.
  • Driver turnover is a big problem for ride-hailing companies, and Uber has to compete for them with rival Lyft, which has cultivated a driver-friendly image.
  • Uber published a paper on time and income flexibility for drivers to support its new policies.
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Combating America's food waste problem

Food waste takes up 21% of America's landfill volume. The founders of Misfit Juicery say that ugly fruits and veggies may be the solution.

WATCH: More from Smarter Faster


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Study: knowing more doesn't change disbeliefs about science

Associated Press

If someone is already pre-disposed to disbelieve scientific conclusions around issues like human evolution, climate change, stem cell research or the Big Bang theory because of their religious or political views, learning more about the subject actually increases their disbelief, a new study finds.

Why it matters: The research flies in the face of commonly held views that more science literacy and greater education around controversial scientific issues will diffuse polarization but supports a growing body of evidence about how our identity forms our views.

  • For stem cell research, the Big Bang theory and evolution, religious identity overrode science literacy.
  • Political beliefs surrounding climate change led to polarization.
  • They found little evidence (yet) of political or religious polarization for nanotechnology and genetically modified food.

What they found: Carnegie Mellon social scientists looked at Americans' beliefs around six potentially controversial issues: stem cell research, the Big Bang theory, nanotechnology, GMOs, climate change and evolution. The found people's beliefs about topics associated with their religious and political views become increasingly polarized with more education (measured by markers like the number of years in school, highest degrees earned, aptitude on general science facts or the number of science classes taken). Baruch Fischhoff from CMU said:

"These are troubling correlations. We can only speculate about the underlying causes. One possibility is that people with more education are more likely to know what they are supposed to say, on these polarized issues, in order to express their identity. Another possibility is that they have more confidence in their ability to argue their case."

One bright spot for science literacy advocates: If someone is already pre-disposed to trust the peer-reviewed science process and scientists, they're likely to believe what they say and find in all of these areas.

Go deeper: Arizona State University's Daniel Sarewitz got to the heart of it in the Guardian yesterday.

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U.S. sanctions Chinese, Russian entities that help North Korea

Susan Walsh / AP

The U.S. Treasury has unveiled sanctions targeting Chinese and Russian entities doing business with North Korea, which is intended to add pressure to the North to soften its nuclear program. North Korea's number one trading partner is China, and most of the sanctions target Chinese companies, per The Washington Post.

Why it matters: This comes the same week as the U.S. and South Korea are conducting military exercises that China, Russia, and North Korea have all been opposed to, given that it looks like the U.S. is escalating its threat to the North — making an already tense week that much more precarious.

The sanctions target 10 entities and 6 individuals that help those who are already sanctioned who support North Korea's missile program or assist the country with its energy needs. It also targets people who help North Korea's export of workers, per CNBC.

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Takeaways from former nat sec officials on Afghanistan

Carolyn Kaster / AP

The Cipher Brief got reactions to President Trump's speech on Afghanistan from top former national security officials — including former acting CIA director John McLaughlin, former Army vice chief of staff Gen. Jack Keane, former CIA and NSA director Michael Hayden, and former acting CIA director Michael J. Morrell.

All are worth reading in full for their diversity of opinions, but here are three major takeaways across the interviews:

  • Trump sounded and acted presidential, which all four officials agreed was vital to delivering this speech effectively.
  • There was no outlined timetable for withdrawal — a departure from Obama-era policies that was seen as a positive and necessary step.
  • Trump's call to have India more involved in Afghanistan was the biggest news, but it could have a potentially destabilizing effect with the United States' relationship with Pakistan.
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Pence explains why Trump didn't announce troop numbers

AP

Vice President Mike Pence defended President Trump's speech on Afghanistan in a USA Today op-ed.

His overarching message: "Trump has determined that conditions — not arbitrary timetables — will guide our strategy. The previous administration alerted our enemies ahead of time by announcing troop numbers and timelines, something President Trump has wisely refused to do."

  • Trump's plan vs. Obama's: "We need only look at Iraq, and the rise of the Islamic State of Iraq and Syria following the last administration's withdrawal of U.S. forces, to see where this path leads."
  • Focus on Pakistan: "America will not write a blank check for countries that fail to root out the same forces who try every day to kill our people. Pakistan has much to gain from partnering with our effort in Afghanistan. It has much more to lose by supporting terrorists. The president has put them on notice."