Good morning. The Biden administration is tightening restrictions on China’s ability to buy advanced semiconductors, fueling friction with U.S. businesses that sell to the vast Chinese market.

The Commerce Department said Tuesday that it would significantly constrict exports of artificial-intelligence chips, making it tougher for U.S. companies Nvidia and Intel to sell existing products in China—or to introduce new chips to circumvent the rules.

• Closing the gaps: The move aims to close perceived loopholes in export controls announced a year ago, which themselves had faced strong opposition from the global semiconductor industry and escalated tensions with Beijing.
   
• Stopping Chinese breakthroughs: The goal, Commerce Secretary Gina Raimondo said, is to limit China’s “access to advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers.” The chips are critical to Chinese military applications, she said.
   
• Industry opposition: The Semiconductor Industry Association, a U.S. chip-industry group, blasted the rules in a written statement. “Overly broad, unilateral controls risk harming the U.S. semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere,” the group said. Chinese officials have criticized U.S. chip controls as violating international trade rules and destabilizing the global chip industry

Auto-safety regulators investigate Cruise’s self-driving cars over pedestrian risks.

General Motors’ driverless-car unit Cruise is confronting a new safety investigation by federal regulators, after reports of its autonomous vehicles exhibiting risky behavior around pedestrians.

The National Highway Traffic Safety Administration said in a Tuesday filing that it had opened a safety-defect probe into nearly 600 driverless cars operated by Cruise, adding that they might not be exercising appropriate caution in crosswalks and roadways.

NHTSA says it is aware of four incidents, including two that resulted in injuries.

U.S. derivatives regulator plans tougher enforcement approach.

Commodity Futures Trading Commission enforcers intend to push for heavier fines, particularly on repeat offenders, and will increasingly eschew settlements that allow firms to avoid admitting fault, the financial regulator’s enforcement unit said Tuesday.

The CFTC, which polices derivatives markets, will crack down in particular on repeat offenders, it said in a memo to enforcement staff. Recidivist firms can expect to see monitors put in place to oversee compliance as part of their settlements, it said.

“At the end of the day, the penalties need to exceed the costs of compliance,” CFTC enforcement head Ian McGinley said Tuesday evening. “We want to send a message that firms should be investing in compliance.”

• Payment processor ACI Worldwide has agreed to pay $20 million to settle allegations a 2021 computer testing error resulted in its inadvertently withdrawing more than $2 billion from the accounts of mortgage holders.
   
• The Federal Reserve is preparing a proposal that would lower the fees merchants pay to many banks when consumers shop with debit cards.

Tech leaders warn of risks, weaknesses of AI.

The Wall Street Journal kicked off its annual Tech Live conference Monday in Laguna Beach, Calif., with an emphasis on the fast-paced changes wrought by artificial intelligence across business, technology and policy-making.

Venture capitalist Vinod Khosla against making the code behind advanced AI models available to the public, which some technologists have championed as a way to bolster the technology’s development. “You don’t open-source the Manhattan Project,” he said, referencing America’s clandestine efforts to build an atomic bomb during World War II.

Arnold Schwarzenegger said he is aware of AI use in Hollywood. Whether or not his likeness will be used by AI in the future is a point his children will have to negotiate, the 76-year-old actor said.

“I will not be around, even though I want to live forever,” he said.

The niche insurance policy behind a software company’s big legal payout.

It could be years before Appian, a software company, sees a dollar of the $2 billion judgment it was awarded last year in a corporate espionage case against rival Pegasystems. Still, Appian, which sells business-process automation software, is certain it will get paid at least $500 million, despite a potentially lengthy appeal.

That is because McLean, Va.-based Appian last month took out what’s known as judgment preservation insurance, a niche but increasingly popular type of policy aimed at securing awards in big corporate lawsuits.

• President Biden, arriving in Israel on Wednesday to reaffirm U.S. support for its longtime ally in the war with Hamas, appeared to absolve Israel of responsibility for a deadly blast at a hospital in Gaza that has demonstrated the volatility of the conflict and heightened fears of escalation.
   
• Interest rates are high, inflation remains elevated and pandemic savings are dwindling. Yet the U.S. consumer is on a spending binge.
   
• Inflation came for your healthcare this year. Next year is looking to be just as bad.
   
• Ukraine launched ATACMS missiles at Russian forces on Tuesday, marking the first time that the U.S.-provided weapons have been used since Moscow invaded the country. Also on Tuesday, Russia’s legislature voted unanimously to revoke its ratification of a significant international nuclear-test-ban treaty, a move that threatens to intensify global insecurity.
   
• The mystery surrounding suspected sabotage of critical infrastructure in the Baltic Sea deepened after Sweden said that a second underwater telecommunications cable was damaged without explanation.
   
• With one war raging in Ukraine and another unfolding in the Middle East, Chinese leader Xi Jinping is promoting his signature foreign-policy project as a force for unity, cooperation and prosperity around the globe.
   
• Chinese property giant Country Garden has missed a final deadline to pay interest on a dollar bond, capping a remarkable fall from grace for a company that was once considered among the safest developers in China.

• Rep. Jim Jordan (R., Ohio) failed to win enough votes Tuesday to be elected House speaker after more Republicans than expected joined Democrats in declining to back him, setting up lawmakers for an unpredictable second round of balloting.
   
• General Motors is delaying the opening of a large electric-pickup-truck factory in Michigan, the latest sign that the auto industry’s enthusiasm around EVs is starting to wane as sales growth for these models slows.
   
• Related, the well-known investor in office towers and apartment buildings, is wagering $1 billion on a niche real-estate sector often associated with frozen pizzas, steaks and yogurt.
   
• DoorDash, the nation’s biggest food-delivery company, wants to woo a group that sometimes still behaves like it’s stuck in lockdown—people who spend hours a day playing videogames.
   
• The U.S. ambassador to Russia visited jailed Wall Street Journal reporter Evan Gershkovich on Tuesday, a week after a Russian court upheld an extension of his pretrial detention.

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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