PoliticsForeign Policy


Commerce Department Temporarily Shelves New Huawei Trade Restrictions

The Defense and Treasury departments are worried that potential revenue loss to American companies could hurt research and development budgets.
Posted at 1:55 PM, Jan 25, 2020

The Department of Commerce is temporarily holding off on a rule change that would make it more difficult for U.S. companies to do business with Chinese tech giant Huawei.

The Trump administration has long believed Huawei devices pose a national security threat. It has pressured allies to move away from working with the telecom company. 

The U.S. placed the Chinese tech giant on a trade blacklist last year. That restricted American firms from selling components to Huawei without first getting government approval. But the Commerce Department extended a temporary license in November to allow limited transactions. 

A loophole allows U.S. companies to sell to Huawei without a license under certain conditions: they must be shipping from an overseas location, and the goods they're sending have to be made of less than 25% American-made materials or patents.

The Commerce Department's proposed rule tightens that loophole significantly — that percentage allowed would drop to 10%.

But now the rule change is on hold after some government officials argued the measure could actually harm national security. The Wall Street Journal reports that the Defense and Treasury departments are worried the potential revenue loss to American companies could hurt research and development budgets, eventually causing more harm than good.

The Chinese government invests tens of billions of dollars in Huawei, giving it a competitive edge against U.S. companies. The New York Times notes that President Donald Trump's advisers have warned against allowing Chinese companies to get ahead in 5G technology, for fear that it could compromise intelligence between the U.S. and allies. 

Huawei has repeatedly denied that its products pose a national security threat, calling U.S. claims "unsubstantiated."

Trump administration cabinet officials are expected to meet in the coming weeks to discuss whether or not to implement the proposed rule.

Contains footage from CNN.