Trump to extend reprieve for US companies selling to Huawei

Trump to extend reprieve for US companies selling to Huawei

The Trump administration was poised to offer a new reprieve for US companies selling to Huawei, easing tensions with Beijing after a rapid escalation in the trade war between the countries this month. 

According to people familiar with the matter, the US commerce department was preparing to extend a temporary general licence for companies to do business with Huawei for 90 days, with an announcement due on Monday. The final details of the extension had not been ironed out, so there could be some changes to the announcement that could make it fall short of a blanket renewal, however. The commerce department declined to comment. 

The decision to allow more time for transactions between Huawei and US companies will probably be interpreted as an olive branch from Washington to Beijing, as they attempt to get trade negotiations back on track after a testy few weeks that rattled markets and heightened concerns about a global economic slowdown. 

Donald Trump, the US president, early this month said he would slap a new round of tariffs on Chinese imports starting on September 1 and his Treasury department formally labelled China a currency manipulator, eliciting anger and promises of retaliation on the Chinese side. Meanwhile, the US administration has approved an $8bn sale of fighter jets to Taiwan, which risked further irking Beijing. 

Yet Mr Trump has shown signs of fretting over the economic impact of the trade war with China as he heads into the 2020 re-election campaign. Last week he said he would delay the impending imposition of levies on a big chunk of Chinese imports until December to shield the Christmas shopping season from its effects. He also softened his rhetoric towards China, saying he would “soon” have a call with Xi Jinping, the Chinese president, and he expected the trade war to be “fairly short”. 

The extension of the reprieve on Huawei — first reported by Reuters — is a victory for the business community, which has pushed hard for more flexibility with regards to the Chinese company.

The Trump administration placed Huawei on an export blacklist run by the commerce department in May, after a key round of trade talks with China broke off acrimoniously. US officials have accused Huawei of being a threat to national security, violating US sanctions, and being a vehicle for espionage.

But US technology companies, including Google, whose Android operating system is used by Huawei, quickly moved to demand some leeway in dealing with the ban, arguing that there would otherwise be major disruptions to their business, customers and even US security. 

Extending the licence is a middle road between fully implementing the ban, which China hawks in Washington are arguing for, and allowing it to lapse entirely. Mr Trump has suggested that finding a solution to Huawei might be part of any comprehensive deal with China on trade. 

“In many ways this kicks the can down the road, this is not a long-term solution,” said Samm Sacks, Cybersecurity Policy and China digital economy fellow at the New America Foundation. “Many in Washington want to kill the company. Others want to use it as leverage. You can’t have both,” she added. 

Senior US and Chinese negotiators are expected to hold face-to-face talks in Washington in early September in the hope that they yield a better result than the last one in Shanghai last month, which led Mr Trump to complain that Beijing wasn’t abiding by its promises and move to impose the new round of tariffs. There is no firm schedule for next month’s negotiations, however. 

Trump administration officials have linked leniency towards Huawei to Chinese purchases of US agricultural goods, so observers of the trade war will be closely watching to see whether Beijing responds by rebooting its purchases of American farm products in the coming days. 

A three-month extension in the Huawei licence would set a new deadline for mid-November, around the time of the Asia-Pacific Economic Cooperation summit in Chile, which could provide a fresh opportunity for Mr Xi and Mr Trump to meet. During the course of the trade war, the two presidents have used international gatherings, including last December’s G20 summit in Argentina, and June’s G20 summit in Japan, to try to rekindle the prospects for a deal.

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