Shutting Off Cruz Control on China

And more from this week…

An uncommon scene unfolded Wednesday in the Senate Commerce Committee, as chairman Ted Cruz (R-TX) and ranking member Maria Cantwell (D-WA) found themselves rebuked by committee members in both parties for attempting to water down strong anti-China legislation.

The bill, called the Connected Vehicle Security Act (CVSA), would bar connected vehicles, software, and hardware tied to China and other adversaries from the U.S. market. Cruz and Cantwell supported two amendments that would have significantly weakened its effect:

The first amendment, from Sen. Tammy Duckworth (D-Ill.), attempted to let Chinese batteries into U.S. supply chains. As written, CVSA bans electronic systems that monitor, manage, secure, or externally communicate EV battery operation. The Duckworth amendment would have limited that to systems handling only wireless battery communication. Cruz argued the broader language could raise consumer costs by needlessly barring foreign batteries. The Council on Foreign Relations’ Chris McGuire, in a white paper circulated to Senate offices before the markup, made the opposite case: an adversary able to reach a battery’s control software could start a fire fast enough to destroy the vehicle and endanger anyone nearby. The CVSA’s broader prohibition was designed to mitigate this exact risk; narrowing it would have left the vulnerability unaddressed. The Duckworth amendment failed, 9–19, and the original language survived.

The second amendment, offered by Cruz, would have allowed companies to operate in the U.S. with greater Chinese ownership. As written, CVSA establishes a bright-line 15% threshold for control by a “foreign entity of concern” (e.g., China). Cruz’s amendment would have eliminated that threshold altogether. As I noted ahead of the markup, one of the companies that stood to benefit from the Cruz amendment was Mercedes, whose Chinese-linked ownership sits just under 20% combined: state-owned BAIC holds 9.98%, and Li Shufu, founder and chairman of the Chinese automaker Geely, holds another 9.69%, together landing at 19.67%, and subjecting Mercedes to the legislation’s prohibition.

Under the legislation as written, the company instead faces a choice: pare those stakes back below the threshold, or stop selling cars in the United States. Eliminating that test in the Cruz amendment would have spared Mercedes from divesting at all, and left room for its Chinese shareholders to buy an even greater stake. Cruz withdrew the amendment without even forcing a vote—an unusual retreat for a sitting chairman, and a telling one, suggesting he knew it would fail, overwhelmingly and at the hands of his own party’s down-dais members, on a provision he had chosen to champion.

The committee then passed the bill as written, unanimously, with Cruz’s and Cantwell’s own votes among the ayes. The two most powerful members of the committee had just been rolled by one of its most junior members. Sen. Bernie Moreno, a freshman Republican from Ohio and the legislation’s lead sponsor, held the line against both the chairman and the ranking member—and won, against a concerted lobbying campaign by industry actors to water the bill down.

That is rare. Committee chairmen control the agenda and the schedule and expect to have the votes before a markup begins; one who offers an amendment and then pulls it from consideration has visibly lost control of his own committee.

The fight is a small window onto a larger shift. We wrote in May about three bills—on housing, labor, and rail safety—advancing through a Republican-controlled Congress over corporate objections, and argued they were best read not as three fights but as one fact: the machinery that once disciplined Republicans away from anti-corporate positions, and toward a more laissez-faire approach to regulating markets, no longer delivers the votes. Wednesday is a fourth data point. A chairman carried an amendment that would address a corporation’s concerns—the kind of ask that once would have slipped quietly into the legislation before anyone knew there was a fight. Instead it played out in the open, and the American interest prevailed over a foreign automaker’s desire to maintain Chinese ownership. — Daniel

KEEPING CALM AND TARIFFING ON

Today marks the expiration of the 150-day window during which the Trump administration could impose temporary global tariffs under Section 122 of the Trade Act of 1974, its stopgap after the Supreme Court invalidated its initial IEEPA tariffs. (We discussed this move at the time in Understanding America, and Peter Harrell wrote an excellent piece for Commonplace about it.) The administration used that intervening period to prepare action under Section 301 of the same law, which has now taken effect. Per the Wall Street Journal:

The new levies target 60 economies, or more than 80 countries, that [USTR] Greer’s office says represent about 99% of U.S. trade. Countries that have laws on the books to combat forced labor were given a 10% tariff, while those without such statutes were given a 12.5% tariff.

Also in the Journal, Greg Ip highlights how the administration is now combining the use of Section 301 (a traditional tool, but one that requires significant process) and Section 338 of the 1930 Smoot-Hawley tariff (rarely used, and granting significant flexibility) to continue its Liberation Day strategy.

Ip also highlights that the tariffs are likely to generate around $250 billion per year in revenue, which the Atlantic Council’s Josh Lipsky notes is likely to make repeal rather difficult for any future administration or Congress facing huge deficits.

Meanwhile, north of the border, Carney Has Tried the Carrot and the Stick With Trump—but Neither Is Working (Wall Street Journal). Maybe that’s because, as Daniel has explained, Canada Doesn’t Have the Cards.

GOOD READS FOR YOUR WEEKEND

In the Wall Street Journal, Stagnant Germany Considers the Unthinkable: Sunday Shopping. “While most of Europe has embraced seven-day retail, Germany has largely stuck to its century-old ban—until now.”

From Mike Lind, at UnHerd, Serfdom, Republican-style. “To address the genuine short-term labor shortages, the bill proposes to raise wages in American agriculture to lure US citizens, while providing federal subsidies to farms in labor-intensive sectors to allow them to purchase labor-saving agricultural technology. Just kidding!”

• Bonus link: If you haven’t read it already, Daniel’s essay on the Mudsill Theory of a two-tiered labor system is a must.

From the Vanderbilt Policy Accelerator, War Housing. People complaining that labor and materials shortages make an expansion of the housing supply too difficult should take a look at what the country accomplished during World War II.

• Bonus link: Speaking of interesting case studies, Baron Public Affairs highlights the Roosevelt administration’s efforts to defuse revolutionary pressure from a restive creative class during the Great Depression through “federal subsidies to keep the overeducated and underemployed busy and dispersed.”

And AEI’s Robet Pondiscio writes an open letter to Alpha School, famous for promoting its model (>$40K-per-year private school with minimum teacher salaries of >$100K) with claims like, “all educational content is obsolete. Every textbook, every lesson plan, every test, all of it is obsolete because GenAI is going to be able to deliver a personalized lesson just for you.”

WORLD’S WORST LEDES

The introductory anecdote for a big-think news story can be highly instructive. If this is an important trend, not just a random anecdote, the best and most compelling example ought to be credible and replicable. When it backfires, you get, well…

In the New York Times, Senior Living Facility in Distress as Immigrant Caregivers Are Forced Out:

Channing House, a senior living community just a mile from Stanford University, is home to pioneering scientists, tech executives and inventors. But during a recent meeting, its residents confronted a problem they felt powerless to fix: the sudden loss of their caregivers to immigration policies.

Residents of Channing House often pay seven-figures for entry to the community. A representative couple, highlighted later in the article, are “Lou Thompson, a high-speed rail expert who helped develop Amtrak’s Northeast corridor and was there with his wife, Alice Galenson, an economist who worked at the World Bank.” When it comes to caring for people like them, are these jobs Americans won’t do, or simply services that wealthy retirees don’t want to pay for?

And in the Washington Post, The Biggest Winners of the American Economy Fear They’re Sinking Fast:

Throughout a nearly two-decade career, Susan Smith considered herself a winner in the American economic lottery. She moved easily between tech jobs, earning a salary of more than $500,000 in her most recent position, as a mid-tier executive at Meta. A single mom, Smith could afford two nannies and support her disabled son without financial worry.

But as Silicon Valley has pushed headlong into artificial intelligence and heavy job cuts, that security has evaporated. Smith once readily put in 70-hour workweeks, believing the tech giant’s apps benefited humanity and th…

Adhering to the principle that we shouldn’t say anything at all if we don’t have anything nice to say, we’ll just leave that one right there.

SPEAKING OF TECH, THOUGH

There are so many terrible people out there. Yes, this violates our just-stated principle but, like, come on:

At a work conference in Albuquerque, N.M., in May, Chang wore a small pin with a red light indicating it was recording. Someone who worked at the conference eventually approached Chang and told her the device was making people uncomfortable. She found the request to stop recording triggering.

“It’s my thing,” she says. “I’m not attributing who said what. It’s for my general knowledge.”

Chang has also taken to recording most of her first dates, usually with Granola. She puts her phone out on the table or her chair and then once the date is through, she has the feed automatically sent to Anthropic’s Claude to report back on how she did.

The whole Wall Street Journal story is worth a careful read because, as venture capitalist Eric Bahn puts it, “I just see this as normal protocol. Our society is moving to a state of East Germany.” And yes, Bahn has invested in Chang’s start-up.

The Journal takes a remarkably fatalistic view:

With the rise of camera-equipped smartglasses, AI-recording bracelets and other covert devices, a societal shift is under way. And it isn’t clear how much say we will have in the matter—or how much our conversations will change if we all know they’re all being entered into the permanent record.

But actually, we have as much say as we want, via our republican form of government. We can just ban the devices. We can require two-party consent. And cultural norms are defined by actual people. If everyone sits cowed to the side, the Emmie Changs of the world will indeed ruin our public spaces. When you have the option, try saying, “excuse me, could you please turn that off” and “no, actually, it’s not OK if you record this conversation.”

AND FINALLY, A SALUTE

‘Weird Al’ Yankovic Turned Down Million-Dollar Offer to Perform in Saudi Arabia: ‘I Don’t Need to Take Any Money if It Makes Me Feel Icky’ (Variety).

Enjoy the weekend!