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US-China Trade War Halts at Huawei for Falling Under “Entity List”

Last updated on May 19th, 2019

The US-China trade war that invoked on the note of technology has once again brought the issue in light, this time concerning a major Chinese tech firm.

On Wednesday, the Trump administration thwacked Huawei Technologies Co. Ltd. with an extreme penalty, which would make it difficult for the firm to do business with any American company. The move came as a dramatic leap in the ongoing economic feud between the two nations.

The Commerce Department’s Bureau of Industry and Security of the US informed that it was adding the Chinese firm to its “Entity List”, which is known as the “death penalty” to some. Companies that are part of the list are unable to survive as the US firms are refrained from doing business with them.

The US Commerce Department stated that the decision is made considering Huawei’s engagement “in activities that are contrary to US national security or foreign policy interest.”

The Chinese tech firm is also the world’s largest telecommunications equipment maker, and backed majorly by the Chinese government. Among other things, the US Justice Department accused the company of violating the Iran sanctions.

In a statement, Commerce Secretary Wilbur Ross said, “President Trump has directed the Commerce Department to be vigilant in its protection of national security activities.”

The penalty came after US President Donald Trump’s declaration of “national emergency”, while he also signed an executive order expanding government powers to shield communications networks.

The Trump administration’s move against Huawei followed the soaring tensions between US-China that emerged last week. The two nations got trapped in a tit-for-tat rivalry, imposing severe tariffs on their imports from the other country.

The US on Friday initiated by imposing 25 per cent tariffs on Chinese imports worth $200 billion. China in retaliation also announced large import penalties on $60 billion in US goods. While President Trump is stern on his imposed tariffs, China is also in no position of flexing its stance.

The US-China presidents, Donald Trump and Xi Jingping, would likely meet on the sidelines of this year’s G20 summit scheduled to take place next month in Japan. However, analysts have asserted that as the two countries are world’s two biggest economic powers, a massive amount of economic damage could be expected before the two actually meet.

While the US-China trade war continues to ramp up, the new penalties by US on the Chinese firm Huawei, only seem to prompt greater tensions between the two rival nations. As per the recent pattern, expecting China to sit back without retaliating would also be a mistake.

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