It appears that Trump's aggressive trade war escalation is proving the doubters wrong and already bearing fruit.
Earlier on Wednesday, President Trump signed an executive order declaring a "national emergency" in permitting the US federal government to legally block American companies from purchasing foreign-made telecom equipment deemed a national security risk. The move is expected to restrict Huawei and fellow Chinese telecommunications company ZTE from selling their equipment in the U.S. Shortly afterward, the Department of Commerce said it had put Huawei on a blacklist that could forbid it from doing business with American companies.
In the executive order, while Trump did not name any company specifically, it was the latest action in the ongoing security saga with Huawei. The order reads that “openness must be balanced by the need to protect our country against critical national security threats.”
Separately, the Commerce Department’s move to put Huawei on its “Entity List” means U.S. companies will need a special license to sell products to the Chinese company. A similar move against ZTE last year nearly forced the company to shut down before Trump intervened and a deal was reached.
As a result of allegations it works covertly with the Chinese government to facilitate industrial and other espionage, Huawei has been banned from building the 5G networks in the US, in Australia, and numerous other countries - if not in Europe, where the local liberal elite would rather be spied on by Beijing than appear to fold to the demands of the White House - after concerns were raised that the company’s products may be used by the Chinese government for surveillance.
And just a few hours after Trump signed the executive order, the Chinese telco released a statement in response to the US ban, in which while it warned that the country will lag behind in 5G networks made by “inferior” or “more expensive alternatives."
Yet while Huawei leaders have long insisted their company operates independently of the Chinese government and that its products aren’t used for spying, it appeared to confirm just that when the company said that it is "ready and willing to engage with the U.S. government and come up with effective measures to ensure product security."
Why Huawei needs to ensure product safety if, as it claims, its products are safe is certainly worth a scratch on the head, and if anything it validates Trump's suspicions about Huawei's less then noble motives, which resulted in the US leveling 23 charges against Huawei and its CFO, and daughter of the CEO, Meng Wanzhou including charges of violating trade sanctions with Iran and attempted theft of trade secrets. Huawei has, of course, maintained that it is all a “political” game with no credence.
Huawei's full statement is below.
“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. 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. In addition, unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues.”
Trump's order is clearly meant to ratchet up pressure on Beijing to concede in the trade war; and just to make sure Xi Jinping has a few days to contemplate the latest US retaliation, the Commerce Department’s blacklisting of Huawei isn’t effective until it’s listed in the Federal Register. The department didn’t say when that would occur. The administration official said Wednesday that the Commerce Department was expected to take as long as six months to fashion an approach to the order, so there might not be an immediate effect. The government may eventually prohibit products from specific companies or countries as Commerce carries out Trump’s order.
Last week, the U.S. Federal Communications Commission barred China Mobile Ltd. from the U.S. market over national security concerns and said it was opening a review of other Chinese companies.
Finally, in addition to getting Tom Friedman and Steve Bannon to agree on something, Trump's hard line stance against China appears to be earning him some very unexpected friends: democrats. "This is a needed step, and reflects the reality that Huawei and ZTE represent a threat to the security of U.S. and allied communications networks," said Democratic Senator Mark Warner of Virginia, the vice chairman of the Senate Intelligence Committee.