Trump prohibits trade, transactions with Huawei’s 68 affiliates

The U.S. Commerce Department registered 68 affiliates of China’s Huawei, the world’s largest telecom equipment maker, on its “Entity List” that bans the company from purchasing parts from U.S. firms without approval, Reuters reported on Thursday. A Commerce Department spokesman said the executive order will take effect immediately even if it will not be published in the government’s official gazette through Tuesday next week.

U.S. President Donald Trump declared a national emergency on Wednesday, and signed an executive order that bans U.S. companies from using telecom equipment manufactured by the company that poses threat to the U.S.’ national security. “The Chinese company was engaged in activities “contrary to US national security or foreign policy interests,” the department said. The reason behind this argument is the U.S. Justice Department’s indictment of Huawei CFO Meng Wanzhou on the charge of violating international sanctions against Iran.

Now that Huawei has been enlisted on the list dubbed “Trade Blacklist,” it will likely to find it difficult to make transactions with U.S. companies. Whenever Huawei buys parts and components including semiconductors from a U.S. company, it should pass review by the U.S. Commerce Department.

Washington can block parts supply to Huawei anytime based on these restrictions. “President Trump’s Huawei threat is a ‘Nuclear Option’ that can halt China’s rise, but could bring massive impact on the entire world,” Bloomberg reported.

If transactions with Huawei, the world’s largest telecom equipment maker and No. 2 smartphone manufacturer, get blocked, American IT companies are also expected to take a hit. “The Chinese company (Huawei) spent more than 10 billion dollars in the U.S. last year,” The Wall Street Journal said. “Notably U.S. semiconductor equipment makers benefited from the Chinese government’s ambitious plan to develop its own semiconductor industry.”


Yong Park parky@donga.com