President Donald Trump has issued an executive order that effectively bars US companies from using any telecoms equipment manufactured by China’s Huawei.
The White House said the order declared a “national emergency” in relation to threats against US telecommunications and authorised the US commerce secretary to “prohibit transactions posing an unacceptable risk” to national security. It will not apply to transactions that had been completed before the release of the order on Wednesday.
The order, which had been debated internally since last year, came just days after the US and China failed to reach a deal to end the escalating trade war between the two economic powers. It gives the commerce secretary 150 days to draft rules for implementing the policy.
A senior US official said the order was “company and country agnostic”, but it was widely believed to be aimed at Huawei. The US government also took specific action against Huawei on Wednesday by putting the Chinese telecoms company on the so-called Entity List, meaning that American companies will have to obtain a licence from the US government to sell technology to Huawei.
“This action stems from information available to the [commerce] department that provides a reasonable basis to conclude that Huawei is engaged in activities that are contrary to US national security or foreign policy interest,” the commerce department said in a statement.
The moves on Wednesday are the latest effort by the Trump administration to take a tougher stance on China on everything from trade to espionage.
Marco Rubio, a Florida Republican senator and China hawk, said the Trump administration deserved “enormous credit for their efforts to comprehensively tackle the threat that Huawei and other foreign state-directed telecommunications companies pose through their efforts to undermine and endanger critical US systems and infrastructure”.
The move was also welcomed by Democrats. Mark Warner, the Virginia senator, said it was a “needed step” that reflected the “reality that Huawei and ZTE represent a threat to the security of US and allied communications networks”.
China hawks in the administration had been pushing Mr Trump to sign the executive order amid rising alarm within national security circles about the vulnerability of Huawei-supplied wireless networks to Chinese spying. Mr Trump had previously resisted because he did not want to affect trade negotiations.
In February Mr Trump said he wanted the US to win the 5G ultra-high speed mobile telecommunications race through competition and “not by blocking out currently more advanced technologies”. That was widely seen as referring to Huawei.
Ahead of the decision, David Wang, a Huawei executive, said the company was not aware of the order but that the US was not a big market for the group. “We are a company with global operations. So even with fluctuations in any country, we will still be able to have stable operations,” he said on Wednesday.
The move against Huawei comes as China-US trade relations continue to worsen. Mr Trump upped the ante on Friday by saying he would move to put tariffs on the roughly $300bn in Chinese goods that were not already subject to levies. China retaliated by saying it would raise tariffs on $60bn of US imports.
“It’s the right policy, but bad timing. It will be interpreted as China specific and Huawei specific. Doing it right now — when it is not meant to be a source of leverage — has lots of downside and no apparent upside,” said Evan Medeiros, the former top White House Asia adviser to Barack Obama. “The Chinese will more and more see the trade dispute as a US effort to contain China economically as opposed to an effort to level the playing field.”
At the same time the US national security establishment has been pushing other countries to bar Huawei from 5G networks. Australia and Japan have joined the US in barring Huawei from involvement in 5G, and New Zealand’s intelligence services have expressed concern. But the UK and Germany have indicated they will allow Huawei to provide equipment for their 5G networks, in decisions that sparked US anger.
The Trump administration and intelligence officials are particularly worried about the UK move since it is a member of the “Five Eyes” intelligence-sharing network that involves top-secret co-operation with the US, Canada, Australia and New Zealand.
Gordon Sondland, the US ambassador to the EU, told the Financial Times last week that any country that “hands the keys to their country over to the Chinese . . . will regret having done so”.
Huawei equipment is not used by any major US carrier but is employed by about a quarter of smaller rural network companies, according to the Rural Wireless Association. The group has not said how much it might cost to replace existing Huawei equipment, though Pine Belt, one of its members, said it could cost the company up to $14m, while another, Sagebrush, said it could cost $57m.
Rural broadband carriers argue that barring Huawei from 5G would mean it would take even longer to roll out high-speed internet in rural areas. The issue of access to broadband in rural areas is emerging as a theme in the 2020 presidential election as many Democrats talk about the need to take action.
Follow Demetri Sevastopulo on Twitter: @dimi