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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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World Bank president comments on Ivanka Trump's investment fund

Michael Sohn/ AP via pool

World Bank Group president Jim Yong Kim has released a statement about Ivanka Trump's involvement in a fund for women entrepreneurs to be administered by the World Bank (which Trump told our own Mike Allen about on Tuesday):

"The World Bank Group is working with partners on the details around creating a facility for women's economic empowerment, specifically through providing access to finance, markets, and networks. Typically, the governance of facilities we manage is decided among donors, and the secretariat sits within and is administered by the World Bank Group. We are very grateful for the leadership Ms. Trump and Chancellor Merkel have demonstrated on this important issue."

Axios' Dan Primack still has some questions about the fund, including whether Trump or adviser Dina Powell will be actively soliciting contributions while working in the White House.

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Juno, the 'anti-Uber' startup, sells to Gett for $200 million

Courtesy of Gett

Before Juno even made it beyond New York City, the ride-hailing company has already sold to Gett, a competitor headquartered in Israel and with operations in Europe. The two will team up to tackle NYC, and eventually expand to more U.S. cities.

One notable piece of the $200 million acquisition is that Juno is rescinding the restricted stock unit program for drivers it rolled out last summer, and will send a one-time payment to participating drivers. The RSU program was the differentiator that immediately attracted the most attention when Juno first opened up shop last year, advertising itself as the "anti-Uber."

Broken promise? The combined company won't roll out any equity program to drivers in the future, instead focusing on rewarding loyal drivers in other ways, such as cash bonuses, a Juno spokesperson confirmed to Axios via email. The company added that it realized even before the sale that implementing the program turned out to be more difficult than anticipated.

Opposing views: Shortly after the deal was announced, the Independent Drivers Guild in NYC expressed disappointment in the company's move, calling it a "bait-and-switch." Juno, on the other hand, maintains that while the equity compensation was important, it wasn't its only differentiator. "Juno is about the unique culture we created, about the way we treat drivers and riders, about our 24/7 live support, about a fair lower commission," the spokesperson said via email, adding that these aspects will "only get better."

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Just 36% say they'd vote to re-elect Trump

Evan Vucci / AP

Only 36% of people say they would vote to re-elect President Trump if the 2020 election were today, per a Fox news poll, compared to 55% who would vote for someone else.

Most have already made up their minds: 21% say they would definitely vote for Trump and 47% would definitely vote for someone else.

At this point in his first term, 52% said they'd vote to re-elect Barack Obama, and 31% said they'd vote for someone else.

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Trump says he's considering breaking up the 9th Circuit

Carolyn Kaster / AP

President Trump has told the Washington Examiner he is "absolutely" considering breaking up the 9th Circuit, where judges have struck down both his travel ban and sanctuary cities order.

"There are many people that want to break up the 9th Circuit. It's outrageous.... Everybody immediately runs to the 9th Circuit. And we have a big country. We have lots of other locations. But they immediately run to the 9th Circuit. Because they know that's like, semi-automatic."

The circuit includes... Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington and is by far the largest of the 13 appellate circuits.

Deep breath: It's not clear that splitting the court in two would be particularly helpful to Trump, or that this is something he's actually inclined to move ahead with.

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Instagram growth explodes

Instagram announced Wednesday that it has amassed 700 million monthly active users (MAU) since launching in 2010, a more than 16% increase in just four months, and a 40% increase in one year.

Data: Instagram; Chart: Andrew Witherspoon / Axios

Why it matters: Instagram announced the growth achievement the same day Twitter reported its Q1 earnings, where it touted a 2.8% quarterly increase in monthly active users to to 328 million — still less than half of the user base of Instagram, which is four years younger. Instagram rival Snapchat will also be taking note of these numbers, as its audience has dwindled since Instagram launched a copycat stories feature in August. Instagram's stories audience has increased so quickly that it surpassed Snapchat's total audience by nearly 40 million MAU a few weeks ago.

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White House, Dems reach truce on insurer payments

Carolyn Kaster / AP

There's been a lot of buzz this afternoon about the White House supposedly promising to continue the Affordable Care Act's insurer payments. The reality is that it's only going to continue the payments "for now," per a White House official.
But that was enough to convince House Minority Leader Nancy Pelosi, who had clashed with Office of Management and Budget Director Mick Mulvaney over the issue, to dial down the threats of a government shutdown.
From the White House: "While we agreed to go ahead and make the CSR payments for now, we haven't made a final decision about future commitments."
From Pelosi: "Our major concerns in these negotiations have been about funding for the wall and uncertainty about the CSR payments crucial to the stability of the marketplaces under the Affordable Care Act. We've now made progress on both of these fronts ... Our appropriators are working in good faith toward a bipartisan proposal to keep government open."
Behind the scenes: Pelosi talked to White House chief of staff Reince Priebus this afternoon, who has been more conciliatory on the spending bill negotiations than Mulvaney.
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WH considers labeling North Korea a state sponsor of terrorism

Wong Maye-E / AP

A senior White House official said the U.S. is considering adding North Korea to the list of state sponsors of terrorism, per Reuters.

The club: North Korea would be joining Iran, Sudan, and Syria. It was de-listed as a state sponsor in 2008 after agreeing to scale back its nuclear program.

Context: Defense Secretary Mattis, Secretary of State Rex Tillerson, DNI Dan Coats, and Joint Chiefs Chairman Joesph Dunford are briefing Senators in at the White House today on North Korea.

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Al Gore says better than 50-50 chance Trump decides to stay in Paris climate accord

Emily Pidgeon/TED

Odds are that the U.S. will remain a party to the Paris climate accord former Vice President Al Gore said Wednesday In a brief appearance at the TED conference in Vancouver.

"I think there is a better than 50-50 chance the Trump administration will decide to stay in the Paris agreement," Gore said. "I don't know that for sure."

Gore said there is a debate taking place tomorrow inside the White House with a decision set to be announced the third week in May before a G-20 summit. "I think the odds are they will decide to stay in Paris agreement. I certainly hope so."

The backdrop: Gore's comments came during an entire session devoted to the impact on climate change. Discussions ranged from more accurate pictures of the crisis to weighing radical solutions, including shooting chalk into the atmosphere in order to reduce the amount of sunlight heating the earth. That idea drew criticism from Gore and others.

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Trump has filled 5% of his senior administration jobs

Carolyn Kaster/AP

Of the 556 seats that have to be nominated by President Trump and confirmed by the Senate:

  1. 530 seats are empty
  2. 20 Cabinet-level seats filled, 2 await confirmation, 1 failed
  3. 37 nominees awaiting confirmation
  4. 468 seats have no nominations

The precedent: at the 100-day mark, Obama had 487 empty, George W. Bush 521, and Clinton 507

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99% of women founders don't use VC funding

Marius Boatca via Flickr CC

Only 1% of female founders use venture capital funding to back their businesses, according to an Ernst & Young (EY) and Women's Presidents' Organization (WPO) report, obtained by Fortune. The study looked at 430 women-owned businesses over their lifetime, including old and new companies, and found that:

  • 8% of the women are using personal savings instead of VC funding
  • 22% incurred personal debt
  • 18% received a loan from friends or family

Why not: Co-founder of EY's Entrepreneurial Women program said some women don't seek out venture capital funding in the first place and see it as a point of pride and a source of control — 100% ownership of the business.

Where it stands: 2.19% of all venture capital funding went to women last year, which is a smaller percentage than almost every year in the last decade.