On Wednesday, President Trump used an executive order to declare a national economic emergency that empowers the U.S. government to ban the technology and services of any “foreign adversaries” that it says pose “unacceptable risks” to national security. As the Guardian explains, the order invokes the International Emergency Economic Powers Act, which gives the president “the authority to regulate commerce in response to a national emergency that threatens the U.S.”
Under the International Emergency Economic Powers Act, the president can add foreign companies to a list that would ban the company from acquiring parts and technology from U.S. companies without government approval. In other words, if a foreign company produces a product that relies on components or technology provided by U.S. companies, the U.S. government can effectively cut off the part of the supply chain for the foreign company’s product that is produced by U.S. companies.
And that’s what the commerce department is doing to Huawei under the act. It said it was adding Huawei and 70 affiliates to a list that will ban it from acquiring components from U.S. companies without the approval of the U.S. government.
Now just because Huawei is on that list doesn’t necessarily mean the company will actually be banned from acquiring components from U.S. companies, but that scenario is now much more likely and can at the very least be leveraged over China as the trade war between the two countries escalates. Of course, Huawei’s addition to the list isn’t only about the U.S.-China trade war. The company has long been seen as an espionage threat to the U.S. due to its alleged connection with the Chinese government and the oversized influence it has in the deployment of 5G networks around the world.
In a statement to the Chinese state-run Global Times, Huawei said: “If the U.S. restricts Huawei, it will not make the U.S. safer, nor will it make the U.S. stronger. It will only force the U.S. to use inferior and expensive alternative equipment, lagging behind other countries . . . and ultimately harming U.S. companies and consumers.”
The company also tried a bit of de-escalation diplomacy, saying it was willing to “communicate with the U.S. to ensure product security.” Where this goes from here is anyone’s guess, but it’s certain that the Trump administration will leverage all the power in its arsenal to try to rein in foreign companies it sees as a threat to U.S. interests.