In what looks like yet another effort to calm markets and ease tensions, the Commerce department is set to extend Huawei’s “temporary general license” for 90 days when it expires next week.
The reprieve was put in place in May, days after the US blacklisted the company as part of the Trump administration’s maximum economic pressure campaign on Beijing, which, for a time, leaned heavily on the excuse that “national security” is at stake. Following the truce in Osaka in late June, the president raised eyebrows by striking an overtly conciliatory tone towards Huawei. Lawmakers on both sides of the aisle implored the White House not to back down on the blacklisting and even moved to enshrine the ban into law.
Despite the implicit promises Trump made to Xi at the G20, reports suggested the administration had decided to freeze license applications from US companies looking to resume sales to Huawei earlier this month after Sino-US tensions flared anew.
A renewal of the temporary general license would allow Huawei to access critical supplies it needs to service its existing customer base.
Sources told Reuters late Friday that the limited licenses will, in fact, be renewed come Monday, although the administration refused official comment.
Reuters notes the obvious, which is that the situation is “fluid”, but what’s abundantly clear is that China’s corporate crown jewel is still very much a bargaining chip and the fate of its access to US suppliers is perpetually up in the air.
Semi stocks careened to their worst month since the crisis following the original ban.
Earlier this month, the US published an interim rule banning federal agencies from purchasing telecom equipment from Huawei and four other Chinese firms. It was expected, but still created more than a little confusion when Trump declared that the US wouldn’t be “doing business” with the firm, leaving markets to wonder whether he was referring to the ban on federal contractors or private companies.
The White House later confirmed that the president was referring to the federal agencies rule.
If the Commerce department does extend the limited licenses on Monday, it would likely be welcomed by markets, and seen as something of an olive branch to Beijing, although not a game changer in the hopelessly fraught (and seemingly intractable) economic cold war.