Domestic companies will be able to continue doing business with Chinese manufacturer Huawei at least until February, after President Donald Trump’s government extended the moratorium decreed in May for the second time today.
The Trump Administration announced for the first time the ban on U.S. companies from maintaining commercial ties with Huawei in May this year, but since then had already decreed two moratoriums to that decision, to which is added that of this Monday, when it expired the decreed in August.
Trump’s executive is wary of the company’s links with the Chinese government and claims to have suspicions that Huawei could use its mobile phones and other technological equipment to spy abroad and provide information to the country’s leaders.
Although the market share of Huawei mobile phones in the United States is very small (less than 1% according to the most recent Statcounter data), the Chinese company does have a strong presence as a supplier of telecommunications equipment in the country’s rural areas.
Its products, which are substantially cheaper than those of its competitors, have enabled the deployment of wireless networks in large parts of the sparsely populated country where, had it not been for Huawei, these infrastructures would have been virtually financially unviable.
“The temporary extension of the general license will allow tele-operators to continue serving customers in some of the most remote areas of the country who otherwise would have been left disconnected,” said Secretary of Commerce Wilbur Ross.
“The department (of Commerce) will continue to rigorously monitor exports of technology considered strategic to ensure that those who want to threaten our national security do not take advantage of our innovations,” he said.
For his part, Huawei said in a statement that the extension of the moratorium “will not, in any case, have a substantial impact on their business,” but despite this considered that is receiving “unfair treatment” by the government of Trump.
“The decision of the U.S. Department of Commerce to include Huawei in its List of Entities (with which their companies cannot do business) has been more detrimental to the U.S. than to Huawei. This decision has caused significant economic damage to the U.S. companies with which Huawei does business,” they argued from the Chinese manufacturer.
Along with its presence in rural areas, the other key aspect to understand Huawei’s impact on the country’s economy are suppliers of technology and software components, such as chip manufacturers Intel, Xilinx and Broadcom, and Internet giant Google, owner of the Android operating system, present in Huawei’s devices.
Of all the American providers of Huawei, Google has the highest profile, since the phones that the Chinese manufacturer sells worldwide (and are especially popular in markets such as Latin America and Europe) have pre-installed Android and services such as Chrome, Gmail, Google Maps, YouTube and the app store Google Play.
The Huawei veto is framed in a context of trade war with China, which has been open since practically the moment Trump became President in 2017, and which has for the moment resulted in tariffs on hundreds of millions of Chinese imports and similar reprisals by Beijing.
Trade tensions between the world’s two largest economies have affected global activity, with a particular impact on international supply chains.
Specifically, in October the International Monetary Fund (IMF) lowered the growth forecasts for both the US and China for this year and next, as well as the prospects for world growth in the face of growing uncertainty.