We said in June that someone needed to check Huawei CEO Ren Zhengfei for whiplash after the U.S. kept changing its mind about the Chinese telecom's fate. Now we think it's our turn for a doctor visit because just a few weeks after U.S. President Donald Trump said he would let U.S. companies do business with Huawei, he today told reporters that "we're not going to be doing business with Huawei" after China refused to buy U.S. agricultural goods.
China decided not to buy those goods because Trump expanded tariffs on goods imported from the country on August 1. The new tariffs are expected to affect $300 billion worth of goods on top of existing tariffs, but only at a 10% rate, as opposed to the 25% rate previously applied to other goods. This seemed like a middle ground between the immediate expansion of 25% tariffs and Trump's suspension of that expansion following talks with China.
Confused? Imagine how the companies directly affected by this constant back-and-forth on what goods will be affected by tariffs, whether they'll be allowed to continue selling goods to Huawei and other aspects of the U.S.-China trade war probably feel this morning. (To say nothing of the federal workers tasked with carrying out these actions.) The only constant over the last few months has been uncertainty; shareholders loathe uncertainty.
Trump's announcement today reportedly means that U.S. agencies and companies alike won't be allowed to purchase Huawei's telecommunications products. That isn't anything new to the former--Trump banned federal agencies from using products made by Huawei and ZTE when he signed the National Defense Authorization Act (NDAA) for 2019. The ban for private companies, however, could mean Huawei wHuawei won't be part of the U.S.' 5G networks.
"China wants to do something, but I'm not doing anything yet. 25 years of abuse. I'm not ready so fast," Trump said, as per Business Insider.
The situation with Huawei is particularly difficult for companies to parse. First they weren't supposed to work with the company at all, then they were given provisional licenses to keep working with it, then they decided it was okay to sell Huawei products unrelated to national security concerns. Companies like Intel have also applied for licenses to keep doing business with Huawei. Now those licenses will reportedly be delayed at best.
The U.S. wouldn't be alone in banning (or at least considering a ban) Huawei from its 5G networks. Other countries throughout Europe, as well as Australia, New Zealand and Canada have all reportedly considered such bans. The fear is that Huawei, which has been connected to Chinese intelligence agencies, could use its telecommunications equipment to enable widespread surveillance.
Yet, so far Trump has gone back and forth on the motivation behind Huawei's ban. At first the company was deemed a national security risk, but the announcement in June made it seem like the U.S. was simply using Huawei as leverage against China. With Trump today citing alleged abuse by China, the ban seems even more like retaliation.