In late July, President Trump told a host of technology industry executives he would allow them to do business with Huawei under limited circumstances. The Commander-in-Chief said the U.S. Department of Commerce would issue licenses enabling them to trade with controversial Sino conglomerate provided none of their sales threaten national security.
However, on Tuesday, Reuters reported the Commerce Department hasn’t issued a license despite receiving over 130 requests.
Initially, the federal government’s inaction seemed like another trade war volley. However, Reuters discovered the real reason is bureaucratic dysfunction.
Why the Commerce Department Isn’t Issuing Huawei Trade Licenses
According to the news service, the Trump administration hasn’t issued any trade licenses because it doesn’t know if it has the authorization to do so. “Nobody in the executive branch knows what (Trump) wants,” said former Commerce Under Secretary William Reinschformer. “And they’re all afraid to make a decision without knowing that.”
The Trump administration forbade American firms from doing business with Huawei in May for national security reasons.
Initially, industry analysts believed the delay in issuing trade licenses was an act of U.S. retaliation against Chinese trade war escalation. Despite recently pledged to do so, Beijing didn’t resume purchasing large quantities of American agricultural products. Moreover, the Chinese central bank altered the value of the yuan, which caused significant disruption in the U.S. stock markets.
In response, President Trump pledged to issue a new 10 percent tax on certain Chinese imports on December 15.
The Commerce Department’s lack of licensing approvals seemed like Washington taking another economic shot at Beijing. But in reality, the agency is hesitating because it doesn’t have clear direction from the Commander-in-Chief. Unfortunately, the President’s ambivalence has led to several tech giants losing their market capitalization.
Huawei Trade Licenses Might Not Be Coming
It’s worth noting there are indications the Trump administration doesn’t actually intend to issue any trade license approvals.
On August 19, the Commerce Department gave rural telecommunications companies that use Huawei tech another 90 days to find alternate suppliers. Commerce Secretary Wilbur Ross explained the move as helping the telecoms “wean themselves off” the Chinese corporation’s equipment. He also noted his agency isn’t planning on issuing any further trade ban exemptions.
If the Trump administration is willing to play hardball with firms that depend on Huawei equipment to maintain their operations, it might take a similar stance toward Big Tech.
In the past, the President has said a new trade deal could lead to the Sino conglomerate being taken off the blacklist. But, he’s also stated, “We’re not going to do business with Huawei” as recently as this month. In response to Washington’s flip-flopping, Google, Apple, Dell, and HP are moving their manufacturing facilities out of China.
Accordingly, the chipmakers that sold $11 billion of components to Huawei last year should consider an unfortunate possible outcome. With no end to the trade war insight, life without the Chinese corporation might be the new normal.