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Blacklisting Huawei takes the trade war to a dangerous new level
Published on: 2019-05-22
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062Resolving the trade war between the United States and China just got harder. Much harder.

Negotiations between Washington and Beijing were already on rocky ground following new rounds of tit-for-tat tariffs. Then, on Wednesday, the United States dramatically escalated its fight against Huawei, the world's largest telecoms equipment maker and one of China's national champions.

That could scuttle an agreement entirely.

060An 'openly hostile act'

The US government has long argued that Huawei equipment poses a national security threat, and could be used by Beijing for spying. It's lobbying allies to exclude Huawei from next-generation 5G wireless networks. And earlier this year, the Trump administration filed criminal charges against Huawei, claiming that the company stole trade secrets from T-Mobile (TMUS) and violated US sanctions on Iran.

The barrage reached a new level of intensity on Wednesday.

063In this file photo taken on April 4, 2019, U.S. President Donald Trump (R) speaks during a trade meeting with China's Vice Premier Liu He in the Oval Office at the White House in Washington. Locked in a trade dispute for more than a year, officials from the world's two biggest economies returned to the bargaining table.

President Donald Trump signed an executive order barring US companies from using telecoms gear from sources the administration deems a national security threat. That action is seen as targeting China and Huawei, a leader in 5G technology and a global business with revenue of more than $100 billion.

The Trump administration also added Huawei to the so-called Entity List of companies it says undermine American interests. That means US companies may need a license to continue supplying Huawei with crucial components.

061Huawei's Cyber Security Lab at its factory campus in Guangdong province.

The details of the designation and exactly what it means for Huawei still need clarification. But the action serves as a threatening reminder: The United States could sever vital supply lines.

Doing so would kneecap the tech giant, which relies on US companies such as Qualcomm (QCOM), Micron (MICR) and Intel (INTC) for crucial parts. Without them, both the company and its network of customers in 170 countries would be at risk, according to analysts.

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