Earlier this month, President Trump announced that his administration would allow American companies to resume doing business with Huawei. However, the commander-in-chief didn’t provide many details on the government’s new perspective regarding the controversial Chinese conglomerate.
But on Tuesday, the U.S. Department of Commerce revealed that domestic firms could trade with the electronics company again under certain circumstances.
New Trade Rules
On July 9, U.S. Commerce Secretary Wilbur Ross explained that his department would begin issuing licenses to firms that wish to do business with Huawei. However, Ross also said that his agency would only grant permits for transactions that will not threaten U.S. national security. The official further noted the Sino telecommunications corporation would remain on the list of entities the government believes are a threat to American interests.
After the Trump administration effectively declared Huawei an enemy of the state, much of the American technology industry abandoned the firm. Consequently, the company’s CEO Ren Zhengfel predicted that his firm would lose $30 billion over the next two years.
Additionally, National Economic Council Director, Larry Kudlow, provided more details on the federal government’s view of Huawei. He said that while Washington has loosened its restrictions on the conglomerate, government agencies are still banned from buying its products. Furthermore, he stated the company could not be involved in domestic 5G development projects.
Kudlow also referred to the Trump administration’s relaxed licensing guidelines as a “limited time” development.
While the Trump administration’s clarifications about Huawei are enlightening, some aspects of its trade status are still unclear. For instance, outside of 5G equipment and software, it’s unknown which technologies the government considers to be threats to national security.
Commerce lawyer Doug Johnson told Reuters that the only way a firm will know if it can sell its products to Huawei is by applying for a Commerce Department license.
Presumably, several U.S. components makers will be asking for permission to do business with their old client soon. The president’s blacklisting of Huawei has proven financially devastating for the American semiconductor sector.
Indeed, memory chip manufacturer Micron has implemented layoffs at its flagship plant, possibly in response to losing Huawei’s business. Similarly, Broadcom lowered its 2019 financial forecast by $2 billion last month because of the U.S.-China trade war.
Additionally, in May, Intel and Qualcomm reportedly asked Washington officials to lift the Huawei ban. The two hardware giants argued that their chip sales to the Sino telecom aren’t a threat to national security.
Furthermore, the corporations explained that being cut off from one of their biggest clients will have a significant negative impact on their income. Since Huawei spent $11 billion buying U.S. components in 2018, Intel and Qualcomm’s concerns aren’t exaggerated.
As of this writing, the U.S. Commerce Department has not announced that it is issuing any new trade licenses.