That escalated quickly; Not long after the U.S. and China hoped to reach a new trade agreement, the U.S. made it significantly harder for American businesses to work with companies in China, with special emphasis placed on barring Huawei from doing business in the U.S.
U.S. President Donald Trump issued an executive order declaring a national emergency on May 15 "to deal with the threat posed by the unrestricted acquisition or use in the United States of information and communications technology or services designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries."
The White House said this executive order was motivated by the belief that "foreign adversaries are increasingly creating and exploiting vulnerabilities in information and communications technology and services" and that "additional steps are required to protect the security, integrity, and reliability of information and communications technology and services provided and used in the United States."
China isn't the only country accused of such activities, but concern about China is particularly high of late. Many countries around the world are treating Chinese companies with more skepticism, and businesses have also feared that equipment made in China might be used to conduct various forms of cyber espionage or attack.
The order follows Trump's decision to increase tariffs on goods originating from China to 25% on May 10, along with opening the possibility of expanding tariffs to more categories of goods. That decision could have a significant effect on American tech companies, from laptop and smartphone makers to AMD and Nvidia, as well as their customers. This sequence of events probably isn't a coincidence.
It's also telling that Trump's order came after trade talks with China failed. More information about what exactly the executive order entails is available via the White House's announcement.
Singling Out Huawei
That announcement didn't specifically mention China or Huawei. But the U.S. Department of Commerce's announcement that it's added Huawei to the Entity List, which means American businesses need a license from the Bureau of Industry and Security to work with the company, made it clear what country the U.S. is most worried about. As the Commerce Department explained in its announcement:
"This action stems from information available to the Department that provides a reasonable basis to conclude that Huawei is engaged in activities that are contrary to U.S. national security or foreign policy interest. This information includes the activities alleged in the Department of Justice’s public superseding indictment of Huawei, including alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions."
This doesn't come as much of a surprise. The U.S. has targeted Huawei for a while now -- here are the highlights:
- The U.S. barred federal agencies from purchasing networking equipment from Huawei
- Huawei CFO Meng Wanzhou was arrested by Canadian authorities at the U.S.' request for violating sanctions on Iran
- Rumors indicated that Trump might ban Huawei from American networks entirely
- The CIA reportedly linked Huawei to three Chinese intelligence agencies
Huawei has disputed many of those allegations and even claimed that its Constitutional rights were violated by the federal agency equipment ban. But it's faced increasing scrutiny from other countries, too, with some barring its equipment from their 5G networks while others raised question about the security of its products. Now it will find it even harder to do business with American companies.