The trade truce between the United States and China is over, and this is bad news for Huawei
The scheme of US President Donald Trump to introduce fresh Chinese products tariffs could threaten a promised repayment to the Chinese tech business, which has become a flashpoint in the escalating trade war.
There was some hope before Trump shot his recent salvo that he could alleviate the company’s constraints. Huawei, the world’s biggest manufacturer of telecommunications machinery and a major smartphone brand, has been on a blacklist for US trade since May.
But the choice to reignite the trade conflict with a tariff of 10 percent on Chinese products worth $300 billion as of September 1— efficiently a tax on all products coming from China to the United States — casts doubt on any relief.
This escalation raises Trump’s danger of reneging on his pledges to save Huawei,” Eurasia Group experts posted in a Friday morning post.
The trade blacklist from Washington prohibits American companies from supplying electronics and software to Huawei unless they have a permit to do so. The United States argues that the business is a national security issue and argues that it is engaged in operations that run counter to the interests of US foreign policy. Huawei rejects this, saying that none of his products poses a danger to national security.
Trump said he would loosen some of those constraints in June — a concession to Beijing, and possibly relief to some of Huawei’s providers like Google (GOOGL), Intel (INTC) and Qualcomm (QCOM). US Secretary of Commerce Wilbur Ross said Tuesday that, according to a Reuters study, the govt could start reacting next week to demands for permits to start exports to Huawei.
While Trump did not mention Huawei in any of his recent trade tweets, this scheme could be complicated by his tariff announcement. His broadside accompanied an unprecedented round of discussions in Shanghai, where the chairman learned that China had no concrete commitments to buy American agricultural products.
“If China does not resume agricultural acquisitions quickly, it will have little to demonstrate for a move that is profoundly unpopular with China hawks,” Eurasia Group commentators commented, referring to Huawei’s suggested relief. “And if Trump backs commitments to grant permits to US providers from Huawei, the chances of collapsing talks and tariffs are rising.”
On Friday, Huawei refused to comment.
The company has admitted that its business is being hurt by the prohibition. Overseas smartphone revenues plummeted 40 percent after the trade prohibition, said in May founder Ren Zhengfei.
And during an income lecture on Tuesday, Huawei Chairman Liang Hua said that in the second quarter of this year and next year the business will proceed to “face problems.”
Still, Huawei has been bragging about its development. Liang said that he is strong in his 5 G business— where the company is a worldwide leader. However, analysts said the U.S. campaign against Huawei might slow down its 5 G worldwide rollout.