On Wednesday, The New York Times reported that the Trump administration plans on issuing trade licenses to U.S. firms that want to sell their wares to Huawei. In May, the U.S. Department of Commerce placed the controversial Sino firm on its Entity List. Consequently, domestic firms can no longer offer their products or services to the company which spent $11 billion on American components and software last year.
The newspaper notes that President Trump made the decision in a meeting that took place last week. However, as of this writing, the Commerce Department hasn’t announced that it has issued any trade ban exemptions yet.
A Long and Winding Road
The federal government has taken an ambivalent approach toward Huawei since blacklisting the firm five months ago.
In July, the Trump administration announced that U.S. companies could apply for licenses that will allow them to do business with Huawei. Washington made the declaration after the Commander-in-Chief met with Chinese President Xi Jinping during a June G20 summit. With an exemption, American firms could supply the Chinese conglomerate with chips and software, provided that the transactions don’t pose a threat to national security.
Despite personal assurances from President Trump to leaders of the American tech industry, no trade licenses have been issued. In fact, by late August, U.S. firms had made 130 unanswered trade ban exemption requests. Consequently, American chipmakers like Broadcom and Micron blamed the trade ban for their financial underperformance in the third quarter.
The government’s intransigence on issuing trade licenses also caused semiconductor makers Qualcomm and Xilinx to lose market capitalization.
Conversely, Washington gave U.S. firms that depend on Huawei’s telecommunications gear a 90-day trade ban exemption two months ago. Moreover, the Commerce Department has not objected to Micron and Qualcomm resuming sales of non-essential components to Huawei.
For its part, the Sino telecommunications company has struggled mightily since being blacklisted. CEO Ren Zhengfei predicted that his firm will lose $30 billion over the next two years because of the trade ban. Meanwhile, the firm released its flagship Mate 30 smartphone to tepid reviews because it had to launch the device without Google’s Android services
Likewise, Huawei’s attempt to build its own multifaceted operating system has been met with derision from local developers.
Trump Administration Reverses Course
Washington may have authorized the issuing of trade licenses to further negotiations between the U.S. and China.
On Thursday, U.S. Treasury Secretary Steve Mnuchin and U.S. Trade Representative Robert Lighthizer met with a delegation of Chinese negotiators. Though Huawei is ostensibly an independent corporation, the Chinese government has criticized America’s treatment of the firm. Accordingly, Washington’s abrupt about-face regarding trade licenses may be a concession to the Asian superpower.
Although the Sino-American trade war has been a major focus of the Trump administration, it is becoming increasingly unpopular. In September, the Consumer Trade Tech Association noted that the conflict has cost American manufacturers $10 billion. Similarly, China’s decision to suspend purchases of U.S. agricultural products has negatively impacted American farmers.
Facing an impeachment investigation and an election in 2020, President Trump may be looking to end the trade war to satisfy influential technology executives and Midwestern voters.