After unexpectedly conceding to China last week, when Trump announced he would delay imposing the bulk of the 10% tariffs on $300BN in mostly consumer-focused goods from September 1 until mid-December, a move that surprised analysts as it was not based on any concessions from Beijing but was merely a panicked response to the tumbling stock market.
Late on Friday Trump made another unexpected concession when the Commerce Department announced it would extend a reprieve given to Huawei permitting the Chinese firm to buy supplies from U.S. companies so that it can service existing customers.
Back in May, after the US Commerce Dept blacklisted Huawei, it allowed the Chinese telecom giant to purchase some American-made goods in a move aimed at minimizing disruption for its customers, many of which operate networks in rural America.
The “temporary general license” will be extended for Huawei for 90 days, according to Reuters, and will renew an agreement set to lapse on August 19, continuing the Chinese company’s ability to maintain existing telecommunications networks and provide software updates to Huawei handsets.
Earlier this year, the U.S. government blacklisted Huawei blocking it from buying U.S. goods, and alleging the Chinese company is involved in activities contrary to national security or foreign policy interests; at the time the ban was seen as a major escalation in the trade war between the world’s two top economies. As an example cited by Reuters, the blacklisting order cited a criminal case pending against the company in federal court, over allegations Huawei violated U.S. sanctions against Iran.
The United States also says Huawei’s smartphones and network equipment could be used by China to spy on Americans, which allegations the company has vehemently and repeatedly denied.
Still, Reuters sources noted that the situation surrounding the license, which has become a key bargaining chip for the United States in its trade negotiations with China, remains fluid and the decision to continue the Huawei reprieve could change ahead of the Monday deadline.
Another source said that President Trump and Chinese President Xi Jinping are expected to discuss Huawei in a call this weekend.
Despite the last minute reprieve, the world’s largest telecommunications equipment maker is still prohibited from buying American parts and components to manufacture new products without additional special licenses. Many Huawei suppliers have requested the special licenses to sell to the firm. Commerce Secretary Wilbur Ross told reporters late last month he had received more than 50 applications, and that he expected to receive more.
Curiously, some of the biggest critics of the Huawei ban have been US companies: out of $70 billion that Huawei spent buying components in 2018, over $11 billion went to U.S. firms including Qualcomm, Intel and Micron Technology.
The following video provides a broad picture on what this means for America…
The calm before the storm.