Trump’s crackdown on China’s Huawei is escalating the trade war

President Donald Trump in China on November 9, 2017. 

Your move, China.

The United States has increased pressure on China by placing one of its top technology companies on a list that some refer to as receiving the “death penalty.”

On Wednesday, the Trump administration announced that it put the Chinese telecommunications giant Huawei and 70 affiliates on its “Entity List.” That prohibits Huawei from buying parts from US companies without federal government approval. Since Huawei is reliant on US suppliers for parts like chips, it could prove a major blow to the Chinese firm.

Huawei, unsurprisingly, is unhappy about the decision, saying in a statement that America’s “unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues.”

The US move comes at an especially fraught time.

First, it happened shortly after President Donald Trump signed an executive order to protect the United States’ communications and technology network. The administration has accused Huawei of spying on behalf of Beijing, mainly for its own national security and to steal American intellectual property — charges Huawei denies. The Commerce Department’s statement about the move signals that concern was a major consideration, since it stated that Huawei “is engaged in activities that are contrary to US national security.”

Second, it occurred in the midst of a major flare-up in the US-China trade war. Last Friday, Trump raised tariffs from 10 percent to 25 percent on $200 billion of Chinese goods after Washington and Beijing failed to reach a long-sought trade deal despite days of intense talks. China vowed to fight back, and officially did so Monday, announcing it would increase its own tariffs on $60 billion of American products.

It’s therefore possible that placing Huawei on the infamous entity list was a way to try to get leverage in trade negotiations. Trump has done this before.

In January, he said the US might lift the legal trouble against an arrested top Huawei executive if China strikes a good trade accord with America.

However, in a separate case, he backed down after threatening an Entity List-like punishment for another Chinese company, ZTE. That’s because Chinese President Xi Jinping last year personally asked Trump to save that company from the reprimand.

Those episodes underscore just how important the US targeting a top Chinese firm really is. “This is a very, very big deal in terms of the entire relationship between China and the United States and ramping up this trade war,” Doug Jacobson, an export lawyer in Washington, told the Washington Post on Wednesday.

The US and Huawei have been at odds for years

With Wednesday’s move, the US seemingly wants to do two things: safeguard its vital technological and communications platforms, and send a very strong signal to China at a precarious time. But it didn’t come out of the blue; the Trump administration has targeted Huawei for a long time.

“If a country adopts [Chinese technology] and puts it in some of their critical information systems, we won’t be able to share information with them, we won’t be able to work alongside them,” Secretary of State Mike Pompeo told the Fox Business Network last month. That has already put the US at odds with some of its key allies, particularly in Europe.

There’s no question that part of this stance comes from the Trump administration’s hardline China strategy to curb its growing economic power. But Peter Singer, a technology and national security expert at the New America think tank in Washington, told me in March that there are three key, genuine reasons to worry about Huawei.

First, traditional cybersecurity concerns: Anything that passes through Huawei technology could become intelligence for China. Huawei denies that it would spy for China. “Despite the efforts to create fear about Huawei and to use politics to interfere with industry growth, we’re proud to say that our customers continue to trust us,” Ken Hu, a Huawei rotating chair, told reporters in December.

But Chinese law allows for the government to use pretty much anything it wants for espionage in the name of national security. So if Beijing wants to use Huawei to spy, it likely could.

Second, you can mostly guarantee security today, but that only lasts until the next software update. So far, there is no public evidence that Huawei is actually spying for China, but there could be down the line.

Third, the more that Huawei and other Chinese companies grow, the more power they have in the world. That increases the risk of a monopoly, which could prove potentially disastrous, as those companies are linked to an authoritarian government. After all, there’s a chance that in the future we’ll all have to rely on the infrastructure of government-linked companies that aim to spy on citizens.

For those and other reasons, the Trump administration wants to stop Huawei from gaining even more power. Putting it on the Entity List seems like the last push in an effort to do just that.

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