U.S. Ban On Huawei Eased After Technology Stocks Drop

May 21, 2019
Originally published on May 21, 2019 8:35 am
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STEVE INSKEEP, HOST:

Just how far can the United States go in targeting Huawei? President Trump's administration told American firms to stop doing business with the Chinese company. That move prompted Google to block some software applications on Huawei phones that are sold around the world. But then yesterday, the administration gave U.S. firms an extra 90 days to do some kinds of business with Huawei, which underlines just how tricky it is to isolate a giant global player that the U.S. regards as an information security threat. NPR's Aarti Shahani is on the line.

Hi, there.

AARTI SHAHANI, BYLINE: Hi.

INSKEEP: What did the administration do first?

SHAHANI: Right. OK. So it started last week. The Trump administration added Huawei to a short list that American companies cannot buy from or sell to. The ban affects very big players and also some pretty small ones. Take small mobile carriers - OK? - not your Verizons and T-Mobiles but, say, your rural carrier. They buy Huawei equipment because it's cheap. Now they'll have to change suppliers.

On the big end, let's take Google. Google and Huawei have licensing agreements. That's to put apps like Gmail, Maps and YouTube on Huawei phones. So now with the new ban, for any future phones, new licensing agreements are not allowed. The Google apps can't be included. So that'll curtail Google's presence in Europe, where Huawei phones are sold.

Now, Steve, everything I've just said has a caveat. OK? As you'd mentioned, yesterday the administration lightened their touch and said American tech firms could keep engaging in existing business with Huawei until mid-August. That's presumably to give some transition or prep time.

INSKEEP: Is it really possible that the administration could raise these alarms of Chinese spying through Huawei equipment - that's the scenario they put out - and then just let the business go on?

SHAHANI: Sure. That's totally possible. And there would be a precedent for that. Last year, President Trump banned sales to another Chinese phone-maker, ZTE, also citing national security concerns. That basically brought China's president to the bargaining table. And then Trump announced ZTE would pay a billion-dollar fine to do business with America again. So you know, maybe - maybe - the Huawei ban is a move to create leverage. In the last couple of weeks, the Trump administration has increased tariffs on $60 billion worth of Chinese goods, too. China's responded and, you know, tensions are growing.

INSKEEP: You have underlined for us how deeply engaged U.S. companies are already with Huawei, whether it's a small rural phone provider here in the United States or service provider in the United States or whether it's Google operating in Europe. How are tech companies responding?

SHAHANI: So you know, we're seeing a very restrained response from other American tech giants. An Intel spokesperson said the chip-maker would comply with the law, of course, but refused to explain what exactly that meant. Microsoft and Apple both do business with Huawei, and each declined to explain how they would implement the ban.

You know, let's take Apple for a moment and note its delicate position in all of this. China is a really important market for iPhones. So when the U.S. targets Huawei, either with this ban or other actions, that actually helps Huawei's popularity in China. OK? So Huawei's, in some circles, considered a martyr in the country's fight against U.S. imperialism. That is not helpful to Apple, which has been going through a sales slump in China. You know, also, Apple could become the target of Chinese government backlash.

INSKEEP: You know, we just had a team doing some reporting in China. We were in the city of Shenzhen. And there was an Apple store on the street, and there was a Huawei store on either side of it. So you have a sense of how fierce the competition is.

SHAHANI: Surrounding it.

INSKEEP: Aarti, thanks so much.

SHAHANI: Thank you.

INSKEEP: That's NPR's Aarti Shahani. Transcript provided by NPR, Copyright NPR.