Editorial | Action over Huawei set to haunt Trump
- As Washington delays trade ban in battle against Chinese tech giant for second time, US president must realise challenges and risks lie ahead
US Commerce Secretary Wilbur Ross made clear the challenges in cutting Huawei from its American suppliers in his announcement of the delay until November 19. Affected firms and consumers needed more time to adjust, he said. That is an understatement, as shown by it being the second reprieve since the decision was made in May. The reason is simple: Huawei accounts for at least US$11 billion in business for American tech companies and it is a world leader in next-generation 5G telecommunications networks.
Trump contends Huawei’s products are a national security risk, the reason for the company and its non-American affiliates being added to an “entity list” restricting them from buying hardware, software and services from US firms. A further 46 names were added on Monday, taking the total to 114. The allegation that Huawei’s equipment is being used to spy for Beijing has never been backed by evidence. A more plausible explanation for blocking business is Chinese technological rivalry, a significant part of Washington’s trade war with Beijing.
Huawei will be affected in the short term from supply disruption, but being among the top companies in the world, it has the financial and technological means to weather the storm through production self-reliance. Trump’s actions risk creating a divided tech world, where companies make different products for different markets and supply chains are small and fragmented. This will have a chilling effect on innovation, national GDP will be lowered and prices raised. Trump will call himself a winner, but companies and consumers will be the losers.