U.S. Blacklists Huawei in Escalating Trade Tension with China
The U.S. government’s disdain for (or fear of?) Huawei—a Chinese telecommunications and smartphone manufacturing firm with close ties to its government—is no big secret. The reasons for that are several fold, but they have only been ratcheted up of late as the U.S. and China have doubled down on their trade war.
This week, the Trump administration hit Huawei with some severe sanctions, and the Commerce Department said that it was adding the firm and 70 other affiliates to its “Entity List,” a move that bands those companies from acquiring components and technology from U.S. firms without the government’s approval. The explanation from Commerce Secretary Wilbur Ross for the latter move was that the U.S. wanted to “prevent American technology from being used by foreign owned entities in ways that potentially undermine U.S. national security or foreign policy interests.”
Further, the president signed an executive order this week that bars U.S. companies from using telecom equipment made by firms deemed to pose a national security risk. That order didn’t specifically name a specific country or company, but the intent is fairly clear here. That means major telecom companies—and even smaller rural-area companies—could face fines and other possible sanctions if they use Huawei-made equipment in their next-gen 5G networks that are currently being built out.
Granted, the big four in the space—Verizon, AT&T, T-Mobile, and Sprint—have all already said they don’t plan to use Huawei’s technology in their 5G networks, the ban could impact plenty of smaller, rural firms looking to service those harder to reach pockets of the country.
“Huawei is the unparalleled leader in 5G. We are ready and willing to engage with the US government and come up with effective measures to ensure product security,” a spokesperson for Huawei told CNBC, in response to the Trump administration’s actions.
“Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers,” the statement said. “In addition, unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues.”