The government of US President Donald Trump has added the Chinese company Huawei to a blacklist for trade. This makes it very difficult for the telecom giant to do business with American companies.
The U.S. Commerce Department established a rule whereby Huawei and 68 related companies in more than 20 countries are on an Entity List, writes Reuters. This prohibits the Chinese manufacturer from buying parts and components from American companies without the permission of the American government.
Getting such permission is difficult. Applications are considered by the government under a policy in which a rejection is assumed in advance. Huawei says that losing access to U.S. suppliers will cause “significant economic damage to U.S. companies”, and “may affect tens of thousands of U.S. jobs”, said Reuters. “Huawei is looking for solutions directly and will find a solution to this problem.”
The value of the shares of American suppliers fell after the announcement of the rule, for fear that Huawei would no longer be able to buy chips, software and other components from them.
Tensions
The new rule comes after years of tension between Huawei and the United States. The US believes that the Chinese government can abuse the company’s equipment for espionage. The US has already set up several bans on Huawei, and is actively lobbying allies to do the same.
In addition, there have been trade tensions between the US and China for some time now. Only last week, it seemed as if trade talks would collapse after a discussion about Chinese changes to a draft text. The United States subsequently decided to impose higher tariffs on products from China. Beijing hit back with higher taxes on American products.
A spokesman for the Chinese Trade Minister Gao Feng said that the U.S. should avoid damaging the relationship between the two largest economies in the world. He also accused Washington of “trade protectionism”. “China will take all necessary measures to protect the legitimate rights of Chinese companies,” said Gao.
This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.
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