U.S.: Huawei’s Ban Risks Trade War with China 1

Recent tensions have arisen between the United States and China after the Trump administration effectively banned Huawei’s smartphones and equipment. Major technology companies, such as Google and Microsoft, have been ordered to discontinue any further importation of Huawei technology. The Chinese government has responded with varied initiatives, including the cessation of certain trade deals that could potentially disrupt business activities within the United States. Sean Keane, CNET Reporter, stated that Huawei, a company currently leading the world in telecommunications supplies and holding a dominant position in smartphone production, was placed in the U.S. Department of Commerce’s Bureau of Industry and Security Entity List, following an executive order from the Trump administration banning it from the American Communications Network on May 15th. He went on to suggest that the issue which triggered this initiative was due to the company’s association with the Chinese Government’s implantation of spy chip inside certain devices, discovered by the U.S. in 2015.

Earlier this year, the U.S. government heavily questioned Huawei on the 23 indictments for the alleged theft of trade secrets and fraud relating to its evasion U.S. trade sanctions against Iran. Although, the company has denied any misconduct, on April 24 a CIA report emerged stating that the organization was receiving funding from the security arm of the Chinese government, raising questions over its actions as a solely commercial enterprise. Nine days later, Vodafone, a British multinational telecommunications conglomerate, detected a hidden backdoor in Huawei equipment devices based on a company’s report. After eight days of the enforced ban, the U.S. government has reportedly charged Huawei over their deliberate misguidance concerning this connection with the Chinese government.

American president Donald Trump, speaking in the White House, stated, ‘‘You look at what they’ve done from a security standpoint, from a military standpoint, it’s very dangerous,’’ adding that ‘‘If we make a deal, I could imagine Huawei being possibly included in some form or some part of it.’’ The Trump administration raised the import tax of roughly two hundred billion dollars’ worth of Chinese products on May 10 and are potentially pursuing an additional twenty-five percent, amounting to approximately three billion dollars worth of goods. With Huawei being placed on a watch list, it prevents the company from importing essential equipment from the United States. Furthermore, U.S. lawmakers are undertaking an initiative to issue a cheque of $US700 million in grants to assist the American telecoms providers with the expense of deactivating Huawei from their network, as well as blocking the use of equipment or services from the telecommunications company and Chinese telecoms firm ZTE in next-generation 5G networks.

Farmers are among the hardest-hit group from this developing trade war. To assist them, the U.S. Agriculture Secretary Sonny Perdue announced a $16 billion aid program to be used to open markets outside of China for the selling of U.S. products. Additionally, America sent two naval ships to the Taiwan Strait, prompting the Chinese Foreign Ministry spokesmen Lu Kang to issue a stern warning to the U.S. government.  China has retaliated against the U.S. initiative by raising the import tax of American goods, claiming they are economically prepared for a long-term conflict, with Chinese President Xi Jinping speech stating the country will be ready to address ‘various difficult challenges.’’ Based on a statement from the Chinese Ministry of Commerce, China will not engage in a trade negotiation unless the U.S. intends to ‘‘adjust its wrongdoing.’’ The Sydney Morning Herald quoted the Ministry’s spokesman Gao Feng in a weekly briefing: ‘‘If the United States wants to continue trade talks, they should show sincerity and correct their wrong actions. Negotiations can only continue on the basis of equality and mutual respect.’’ He continued to state that ‘‘We will closely monitor relevant developments and prepare necessary responses.’’

The primary purpose for the ban is due to security issues concerning privacy surveillance performed by China within the United States. Cybersecurity expert Professor Greg Austin from the University of New South Wales, commenting on the ABC, stated that “it is a mistake to link this counter-espionage policy and this type of security threat in cyberspace to the global ICT trade, on which the United States is highly dependent…the Trump executive order is not about espionage; it’s about the threat of sabotage to the United States and Western critical infrastructure in a time of war.”

In hindsight, with certain network security measures there may have been a better process available to avoid both governments allowing the public and private sectors to be negatively affected by this development. Although Huawei should and must be accountable for assisting the Chinese Communist Government in matters of espionage, the U.S. government is also to blame for escalating the issue to a point where a number of industries are adversely affected by tariff increases and punitive import taxes. 

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