Tech Stocks Tumble As Huawei DOJ Probe Prompts Fears Of Trade War Escalation

In what appears to be the latest salvo in the US's escalating trade spat with China, the Wall Street Journal reported Wednesday that the Department of Justice is investigating Huawei Technologies, the Chinese smartphone giant, for possible sanctions violations related to Iran.

Last week, the White House banned US companies from selling telecoms components to China's ZTE Corp. after accusing the company of lying while negotiating a settlement with the US over - surprise - violating sanctions on Iran, provoking an outraged response from Beijing, which swiftly announced tariffs on imports of US sorghum.

But according to WSJ, the situation involving Huawei is much more serious, since the DOJ is pursuing criminal charges that could lead to Huawei being saddled with a corporate monitor, or even in the levying of criminal charges against employees who are found to be complicit in the company's behavior. Earlier this year, the Trump administration listed Huawei as a threat to US leadership in the race to develop 5-G technology.

Such a probe raises the stakes for Huawei, which is facing a series of moves by Washington to diminish its already-limited business dealings in the U.S. It could also have knock-on effects for its much larger business overseas, particularly in Europe.

Amid the heightened scrutiny in Washington, some allied countries, where Huawei has big business, have grown more wary.

Washington’s broader assault on Huawei has exacerbated tensions with Beijing, already wrangling with the U.S. over trade. The Trump administration has also recently cited Huawei, the world’s largest maker of cellular-tower electronics and other telecommunications equipment, as a threat to American leadership in the race to develop the future of mobile communication. Hauwei is also the world’s No. 3 maker of smartphones, behind Apple Inc. and Samsung Electronics Co.

The criminal investigation into Huawei follows administrative subpoenas on sanctions-related issues from both the Commerce Department and the Treasury Department’s Office of Foreign Assets Control, according to these people.

The Justice Department’s interest hasn’t been previously reported, and the existence of a criminal probe represents a more serious level of potential misconduct. The Commerce and Treasury departments can impose administrative penalties and regulatory sanctions on the company.

The report sparked a selloff in US tech stocks, adding to the losses from yesterday's session, as trade war fears escalated (though Twitter was also contributing heavily to the drop).

Nasdaq

Nasdaq is now at 3-week lows...

 

 

Comments

FireBrander Truther Wed, 04/25/2018 - 10:10 Permalink

I've met a few Iranians through a local University over the years and I've liked all of them. Can't say that about any other group from the ME that I've personally met; the opposite actually, just lying, manipulative, roaches for the most part.

I'm an independent film buff, films from Iran, the next generation of Iranians are not looking to die for Allah fighting "infidels"...they just want a good cup of coffee and the latest iPhone produced by the "Infidels".

In reply to by Truther

Dorothea Binz FireBrander Wed, 04/25/2018 - 10:25 Permalink

the issue with Iran is primarily with the government and its entities, including the entire revolutionary guard who is the true power and wealth in Iran. But to exclude Iranians from the rather large group of liars in the middle east is ignorant. Lying to infidels is a virtue in Islam just like being gullible about Iranian intentions is a virtue in hard left politics.

In reply to by FireBrander

boostedhorse Wed, 04/25/2018 - 10:11 Permalink

Party is just getting started. Even if Trump gets his "reciprocal" trade deals, it won't have any effect on the trade imbalance. The collapse is still on schedule.

DingleBarryObummer Juggernaut x2 Wed, 04/25/2018 - 10:20 Permalink

Well the good news is summer is coming, and everyone will be outside living real life, communicating face to face and maybe even making eye contact <gasp>.

This will make it harder for him to distract and control the collective consciousness narrative.  His behavior will have to become more extreme and ridiculous to get people's attention away from reality and onto him(fantasy).  This is my prediction.  In other words, get your popcorn ready.  

 

In reply to by Juggernaut x2

LaugherNYC KrazyUncle Wed, 04/25/2018 - 11:18 Permalink

No. You can trade with whomever you choose. If you choose to trade with regimes that enslave their people, seek the destruction of free and democratic states, call for the annihilation of an entire religion, seek to make and use nuclear weapons against their "enemies" and espouse a way of life that is anathema to the entire Western tradition and ethic, THEN you may not have access to the US markets, or to access them through other "backdoor" methods.

It is long past time for the US to have used its economic muscle to STOP the flow of money to terrorists and genocidal killers. TRUMP for all his failures, understands this. You may not like it, and the US has lost some of its leverage through the insane run up of debt by the entitlement state, but it hopefully is not too late to build a 21st Century of peace, and the excision of hate and tyranny that is supported by the autocratic thieves in Moscow, Teheran, Damascus, Pyongyang, etc. What have those monsters given the world save pain and death?

So, no, trade with whom you like. Just don't expect any help from the US or its allies.

In reply to by KrazyUncle