Huawei is expected to receive a 90-day extension on the reprieve it received from the US Commerce Department. The pardon allows the tech giant to conduct business with its US suppliers and continue to serve its customer base.
The Chinese tech company has been caught up in the storm caused by the ongoing trade war between the US and China. The American Commerce Department blacklisted Huawei and banned it from trading with US companies.
In May, the company was temporarily permitted to purchase goods in the US. The agreement reached in May is set to expire on the 19th of August, but now it is expected that it will be extended by an additional 90 days.
What this means is that Huawei is still able to provide its services to existing clients. Software updates are still available on Huawei devices until the agreement lapses.
The US government is using this agreement as part of its leverage against the Chinese government. Due to the volatility of the negotiations between Presidents Trump and Xi, there is no guarantee that the license will survive the given period as it can easily be suspended at a moment’s notice.
Conditions of blacklisting
Huawei is the biggest manufacturer of telecommunications equipment in the world, and the company was barred from buying American components which slowed down the company’s business. The blacklisting of Huawei marked a point of escalation in the trade war between the two countries.
The US government accused Huawei of threatening their national security and foreign policy interests. One of the cases brought up in Huawei’s indictment stated that Huawei has gone against American sanctions on Iran.
Huawei’s actions were deemed deceptive and obstructive, and the US government saw this as grounds for blacklisting.
Huawei has also been accused of using its products to spy on Americans on behalf of the Chinese government. The tech company has denied these accusations several times over, and there is yet to be tangible evidence to prove the claims being made by the US government.
American companies wishing to engage in business with Huawei need a special license which is issued by the Commerce Department.
Many suppliers have already put in applications for this license as they seek to continue their business with Huawei. According to Wilbur Ross, the Commerce Secretary, over 50 applications were received by his department by the end of July, and they expect to receive more.
Huawei and US companies do major business
The business that Huawei brings to the US economy cannot be ignored because it is quite significant. In 2018, Huawei spent $70 billion on components and $11 billion of that went to US tech firms such as Intel, Qualcomm, and Micron Technology.
If the current ban is maintained and Huawei is barred from US business, these companies would lose one of their main sources of revenue.
There is a need for the American and Chinese government to reach a resolution and restore free trade between the two countries.
Many businesses are suffering as a result of this trade war, and a resolution will help to restore the economic gains the countries get from trading with each other.