Trump’s latest executive order blocks Huawei out of US market

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The United States will certainly consider issuing new regulations that aim to limit the amount of sensitive US technology that makes its way to China and helps Chinese companies - indeed, it's still rolling out new export control rules on emerging technologies - but Washington can not unravel the dense network of the global tech sector on its own.

It's not been all bleak, though, with some traders, particularly in Europe, focusing on a potential US decision to postpone tariffs on cars.

The US raised tariffs on a list of US$200 billion (S$275 billion) worth of Chinese imports from 10 per cent to 25 per cent, prompting China to retaliate with higher duties on a revised list of US$60 billion worth of US goods. "We urge the USA to stop its wrong practices, create conditions for Chinese and American companies to carry out normal trade and cooperation, and avoid causing more damage to bilateral economic and trade ties". "China will take all the necessary measures to resolutely safeguard the legitimate rights of Chinese firms", he said.

China is also angry about Canada's arrest of Huawei Chief Financial Officer Meng Wanzhou in December. While the document doesn't name any specific company, Huawei is clearly a suspect. The company has denied the allegations. The US Commerce Department has announced it is blacklisting Chinese telecom giant Huawei and 70 affiliates over alleged threat to national security.

The order means that US companies can not sell or transfer technology to Huawei without a license issued by the BIS.

Obtaining such approval will not be easy. Huawei has called on the U.S. to provide evidence, but the "US believes it doesn't need to show "proof" Huawei is a spy threat", a Wall Street Journal article noted in January 2019.

"Many commentators are suggesting the decision on Huawei and other Chinese telecos effectively means the president has taken the "nuclear option" and it has now moved towards a fully fledged tech..." In April, Huawei officials said U.S. network sales for 2019 were on track to match or exceed last year's figure.

In the end, Trump's decision will affect American companies as much as Chinese companes.

The U.S. government has long insisted that equipment from suppliers including Huawei poses an espionage threat because it is legally beholden to China's ruling party. Qualcomm fell 4 percent.

As negotiations towards resolving the trade war stalled last week, the United States ramped up the pressure by raising tariffs on a list of $200 billion worth of Chinese imports to 25% from 10%, prompting China to retaliate with higher duties on a revised list of $60 billion worth of USA products. Last year, Huawei was the world's second-largest mobile phone supplier by sales after Samsung. Those efforts have had mixed results in Europe, where several countries declined to stop doing business with the company.

In what some have compared to the Cold War arms race, the United States is anxious that 5G dominance would give any global competitor such as China an advantage Washington is not ready to accept. Mnuchin said he and U.S. Trade Representative Robert Lighthizer were planning to travel to Beijing for more talks.

UK Prime Minister Theresa May last month provisionally approved Huawei technology for use in the nation's future 5G telecoms networks, but a leaked account of the meeting said five cabinet ministers raised concerns about the move.

It makes no sense to refuse to accept the fact that China is catching up with the United States in certain areas.

Foreign companies that rely on USA firms for 25 percent or more of their components probably would also be subject to the disclosure requirements, said Reinsch.

For now, it's not assured that the worst case scenario for Huawei will come to pass immediately.

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