President Trump used an executive order Wednesday to declare a national emergency over threats to American technology. The move prohibits American companies from using telecom services solely owned, controlled, or directed by a foreign adversary. The order also “delegates authority to the Secretary of Commerce,” Wilbur Ross, “to prohibit transactions posing an unacceptable risk to the national security of the United States.” The move clears the way for a ban on Huawei, China’s controversial telecom giant.
The order comes amid rising tensions, and an escalating trade war, between the world’s two largest economies. It could just as easily have occurred in a vacuum. The U.S. and other western governments have long accused Huawei of a litany of misdeeds, from sabotaging equipment for use in spying to stealing intellectual property. Huawei is poised to claim close to half of the 5G market, as Axios reported in March, and the Trump administration has urged allies not to adopt its technology. Several European countries, however, declined to stop doing business with them.
The U.S. is also seeking the extradition of Huawei’s CFO, Meng Wanzhou, for financial fraud charges and for violating sanctions against Iran. Meng was arrested in Canada, at America’s behest, in December. The subsequent extortion hearings have captivated audiences on both sides of the Pacific. It also ignited a serious spat between China and Canada. In retaliation for Meng’s arrest, China detained two Canadians, diplomat Michael Kovrig and entrepreneur Michael Spavor, accusing them of espionage. The pair had been detained since December, and were formally arrested Thursday morning.
In a statement to CNBC Wednesday, Huawei condemned the move and strongly denied accusations that it is not independent from the Chinese government. “Restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger,” they said. “Instead, this will only serve to limit the U.S. to inferior yet more expensive alternatives.” With that in mind, small, rural carriers had also opposed Huawei’s imminent blacklisting, as they had depended on Huawei equipment to cut costs.
Intellectual property theft by the Chinese government, and firms it is alleged to control, was one of the main grievances the Trump administration cited in launching a trade war in the first place. Meanwhile, China is clearly winning the 5G race, which is putting immense pressure on the west to come up with a viable alternative to Huawei, and quickly. Chinese countermoves have characterized this recent dispute, so another reaction from Beijing may be coming.