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Illustration: Aïda Amer/Axios

A prominent Silicon Valley investor tells Axios that U.S.-China trade tensions are "the new Cold War."

Driving the news: In this Cold War, tech has evolved from a negotiating point (IP theft, forced transfer) into a cudgel (Huawei, rare earths, etc.). Trade tensions are also having a negative impact on startups, particularly in "hard tech" areas like AI, advanced manufacturing, IoT, machine learning, and networking.

Several venture capitalists tell Axios:

  • Chinese investment in American "hard tech" companies has all but dried up, and portfolio company CEOs are being told not to count on it changing when planning future fundraising.
  • Chinese companies are no longer viewed as viable acquirers due to concerns that the deals could be blocked by CFIUS.
  • Impacts are beginning to be felt on both supply chains, and cross-border VCs are having a tougher time creating mutually-beneficial partnerships between U.S. and Chinese portfolio companies.

What's new: For the first time, these venture capitalists are worried about accepting Chinese investors as limited partners. Not because such passive investments are currently illegal, or really even scrutinized, but because there's a belief that could flip in a hurry. If so, it would reduce the amount of future available capital and create massive complexities for existing investments.

The bottom line: The U.S.-China trade war seems to be spiraling out of control, with even the pretense of progress being dropped by both sides. And, if it continues, tech startups and investors in both countries will need to contend with guardrails that were inconceivable just one year ago.

Go deeper:

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Collins helps contractor before pro-Susan PAC gets donation

Sen. Susan Collins during her reelection campaign. Photo: Scott Eisen/Getty Images

A PAC backing Sen. Susan Collins in her high-stakes reelection campaign received $150,000 from an entity linked to the wife of a defense contractor whose firm Collins helped land a federal contract, new public records show.

Why it matters: The executive, Martin Kao of Honolulu, leaned heavily on his political connections to boost his business, federal prosecutors say in an ongoing criminal case against him. The donation linked to Kao was veiled until last week.

How cutting GOP corporate cash could backfire

Illustration: Aïda Amer/Axios

Companies pulling back on political donations, particularly to members of Congress who voted against certifying President Biden's election win, could inadvertently push Republicans to embrace their party's rightward fringe.

Why it matters: Scores of corporate PACs have paused, scaled back or entirely abandoned their political giving programs. While designed to distance those companies from events that coincided with this month's deadly siege on the U.S. Capitol, research suggests the moves could actually empower the far-right.

9 hours ago - Politics & Policy

Scoop: Kaine, Collins pitch Senate colleagues on censuring Trump

Sen. Tim Kaine speaks with Sen. Susan Collins. Photo: Andrew Harnik/AP via Getty Images

Sens. Tim Kaine and Susan Collins are privately pitching their colleagues on a bipartisan resolution censuring former President Trump, three sources familiar with the discussions tell Axios.

Why it matters: Senators are looking for a way to condemn Trump on the record as it becomes increasingly unlikely Democrats will obtain the 17 Republican votes needed to gain a conviction in his second impeachment.