Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Taizhou Port, China. Photo by Yang Bo / China News Service / VCG / Getty

For decades, western companies have griped that Beijing is forcing them to hand over tech secrets and source code as a price of access to the Chinese market. Now they have a White House prepared to act forcefully to stop it — starting tomorrow, Axios' Jonathan Swan reports — but the fear is a costly tit-for-tat trade war.

The big picture: President Trump plans to announce tentative tariffs, allow a comment period for industry and other players, then enact the sanctions, report Bloomberg's Andrew Mayeda and Jennifer Jacobs. But China is drawing up a reprisal list that includes soybeans, sorghum and live hogs, report the WSJ's Lingling Wei, Yoko Kubota and Liza Lin.

In a March 18 letter, a broad section of U.S. companies and trade associations urged Trump not to proceed with the tariffs, but to find another route to the same objectives.

The background: For Beijing, the demand for tech secrets is part of its pathway to an advanced economy in order to keep delivering economic growth to the Chinese people, says Mary Lovely, an economics professor at Syracuse University. "Political stability is the key," she tells Axios.

  • This is not something new: Starting in the 1930s, the Soviets, under Stalin, developed their industrial base by inviting American and German companies to build steel mills, railroads and dams, then kicked them out.
  • In the Chinese version of the squeeze, Beijing began to demand tech secrets under Deng Xiaoping in the early 1980s.

Josh Kallmer, senior vice president of global policy at the Information Technology Industry Council, says the U.S. solution should be carried out cooperatively with Europe and Japan.

"We want to have Chinese cease requiring the transfer of intellectual property from our companies as a condition for doing business in China."
— Josh Kallmer

One solution is to mirror Chinese practice — say to demand that Huawei, as a price of doing business in the U.S., form a joint venture with a U.S. company and transfer its source code, said James Andrew Lewis, a tech and China expert at the Center for Strategic and International Studies.

"The Chinese do fear reciprocity. When you mention it, you can just see them go rigid."
— James Andrew Lewis

A problem is that this is more of less a bluff — "we would be turning over nine times as much as they would," Lewis says.

Another potential solution was proposed in November by Texas Sen. Jon Cornyn and California Sen. Diane Feinstein. They introduced a bill under which certain tech transfers would undergo greater scrutiny by the Committee on Foreign Investment.

"Whatever we do, we are playing catchup," Lewis said, since technology for commercial planes, cars, batteries and other goods has already been turned into exportable products by the Chinese.

Go deeper

Top economic regulators stressed by vacancies

Illustration: Annelise Capossela/Axios

The boom times are all around us (from corporate deal sprees to the breakneck rise of cryptocurrency) — and the agencies in charge are stretched thin trying to police it.

Why it matters: Overwhelmed staff and a slew of vacant posts could set back President Biden's big regulatory agenda.

GOP Sen. Chuck Grassley announces run for re-election

Photo: Greg Nash/The Hill/Bloomberg via Getty Images

Sen. Chuck Grassley (R-Iowa), the longest-serving Senate Republican, announced on Friday that he's running for re-election in 2022.

Why it matters: The GOP is looking to regain control of both chambers of Congress in the upcoming midterm elections. Several Republicans had urged the 88-year-old senator to run to avoid another retirement after five incumbent senators said they wouldn't seek re-election.

China deems all cryptocurrency transactions illegal

A person walking past China's central bank in Beijing in August 2007. Photo: Teh Eng Koon/AFP via Getty Images

China's central bank declared on Friday that all cryptocurrencies are illegal, banning crypto-related transactions and cryptocurrency mining, according to Reuters.

Why it matters: China's government is now following through with its goal of cracking down on unofficial virtual currencies, which it has said are a financial, social and national security risk and a contributor to global warming.