Trump Effectively Bans Huawei From US, And It Gets Worse

Nellie Chapman
May 18, 2019

The U.S. Commerce Department has placed China's Huawei Technologies Co. and 67 of its affiliates on a blacklist, restricting their access to U.S. suppliers. "China will take necessary measures to safeguard Chinese business' legitimate rights and interests", he said.

"We hope and expect that any decision on Huawei's participation in Britain's build-out of 5G networks will be based on solid evidence, rather than on unfounded speculation and groundless accusations", it said. Trump previous year restricted ZTE, another Chinese telecommunications company, from doing business with American firms over violating USA sanctions with Iran and North Korea.

Over the past year, many US agencies have been warning the administration of the security and espionage threats posed by Huawei and other Chinese companies.

This is not the first time that President Trump has used rarely used laws.

Chinese Foreign Ministry representative Geng Shuang said amid an everyday instructions in Beijing on Wednesday that the United States had been "manhandling its national power" to "purposely smear" and smother certain Chinese organizations.

In February, Light Reading reported that service providers outside the United States and China were developing contingency plans in case of a Huawei ban.

The confrontation over Huawei comes amid a broader trade war between the USA and China, with both sides imposing aggressive tariffs on imports. That is the context we have these US-China trade negotiations, that very much stalled on the front of technology transfer, intellectual property. Commerce Secretary Ross said that his department's action against Huawei is not part of China trade talks.

The White House said on Wednesday that Trump took the action to thwart "foreign adversaries who are actively and increasingly creating and exploiting vulnerabilities in information and communications technology infrastructure and services in the United States".

The missive, which could ultimately become a blanket ban, will "prohibit transactions posing an unacceptable risk to the national security of the United States or the security and safety of United States persons", according to a White House statement.

In a statement, Federal Communications Commission Chairman Ajit Pai called the executive order a "step toward securing America's networks". Announced on May 15, Trump's executive order regarding the technology threat posed by "foreign adversaries" has been viewed unanimously as the latest strike on Huawei.

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The US, it is true, is in the midst of a trade war with China and stands open to accusations that it is trying to block Huawei's ambitions for purely protectionist reasons. It was allowed to resume trading after reaching a Trump-brokered agreement with U.S. authorities, but its recent sales performance has been disappointing.

Donald Trump's decision to force American companies to stop doing business with the Chinese tech giant create losers on both sides.

Most U.S. technology companies have compliance departments that maintain lists of customers restricted by U.S. export sales. Chief Security Officer Andy Purdy told Yahoo Finance that the Trump administration's actions to restrict Huawei's access to American companies will do more damage to USA suppliers than to Huawei.

The restrictions "will not make the US more secure or stronger", the company said.

The US government apparently hasn't been able to find hard evidence that Huawei spies on behalf of China, however.

Mallory was convicted of spying, and he faces up to life in prison (he will be sentenced on Friday).

Huawei is now facing resistance from other governments over the risk that its technology could be used for espionage.

How have other countries responded? Investors are partly anxious that China's government may retaliate against the moves by Trump and block USA companies from selling their technologies in China.

France, Germany and Belgium have not banned Huawei technology, but Japan has from public contracts.

Washington lawyer and trade expert Douglas Jacobson said there will be collateral impact on the U.S. firms that sell to Huawei.

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