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‘Dangerous Sparring’: Trump Turns Screws On Huawei, Prompting Chinese Threats Against Apple, Boeing

"If the US further blocks key technology supply to Huawei, China will activate the 'unreliable entity list."

Tensions between the US and China escalated again on Friday, as the Commerce department amended export rules in order to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain US software and technology”.

Essentially, Wilbur Ross is accusing Huawei of using end-arounds to skirt restrictions put in place a year ago, when the US moved to blacklist the company during some of the trade war’s darkest days.

“Despite the Entity List actions the Department took last year, Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort”, Ross said Friday. He added the following:

However, that effort is still dependent on US technologies. This is not how a responsible global corporate citizen behaves. We must amend our rules exploited by Huawei and HiSilicon and prevent US technologies from enabling malign activities contrary to U.S. national security and foreign policy interests.

You have to love the brazenness of that assessment. This is, after all, related to an across-the-board effort on the part of the Trump administration not just to cripple Huawei’s business with US companies, but also to convince the rest of the world to similarly declare one of China’s national champions a pariah. And yet, Ross says it’s Huawei which isn’t being a “responsible global citizen”.

In any event, the following foreign-produced items are now subject to the Export Administration Regulations:

  1. semiconductor designs, when produced by Huawei and its affiliates on the Entity List (e.g., HiSilicon), that are the direct product of certain U.S. Commerce Control List (CCL) software and technology
  2. chipsets, when produced from the design specifications of Huawei or an affiliate on the Entity List (e.g., HiSilicon), that are the direct product of certain CCL semiconductor manufacturing equipment located outside the United States.  Such foreign-produced items will only require a license when there is knowledge that they are destined for reexport, export from abroad, or transfer (in-country) to Huawei

You’ll recall that US corporates immediately found a way around the Huawei ban last year, and the administration has extended a series of temporary reprieves aimed at avoiding a scenario where rural areas in the US have logistical difficulties providing services. But with tensions rising and recrimination tied to the pandemic gathering political momentum inside the Beltway, it’s not surprising that the administration is taking fresh steps.

Perhaps recognizing that this has the potential to deal another blow to the global economy at a particularly delicate juncture, Ross says “foreign foundries utilizing US semiconductor manufacturing equipment that have initiated any production step for items based on Huawei design specifications… are not subject to these new licensing requirements so long as they are reexported, exported from abroad, or transferred (in-country) by 120 days from the effective date”.

That’s small comfort. Xi’s media man Hu Xijin responded immediately with a threat to unveil China’s “unreliable entity list“, something Beijing has variously threatened to deploy over the course of the 12 months since the original restrictions on Huawei.

“If the US further blocks key technology supply to Huawei, China will activate the ‘unreliable entity list’, restrict or investigate US companies such as Qualcomm, Cisco and Apple, and suspend the purchase of Boeing airplanes”, Hu said.

Needless to say, this is just about the last thing Boeing needs right now, and Tim Cook has spent the last year attempting to navigate these absurdly treacherous waters.

On Thursday, Hu mocked Trump. “This president once suggested COVID-19 patients inject disinfectants to kill the virus”, he sneered. “Remember this and you won’t be surprised when he said he could cut off the whole relationship with China. All I can say is he is beyond my imagination for a normal president”.

Nomura’s Charlie McElligott called this “dangerous sparring into Op-Ex”.

You can expect more “dangerous sparring” to come, especially in light of this week’s incessant anti-China rhetoric out of Washington.

During an interview with Fox on Thursday, Trump said he doesn’t want to speak to Xi, and lawmakers in the US are pressing for sanctions against Chinese officials in connection with human rights abuses in Xinjiang. A separate piece of legislation championed by Lindsey Graham calls for additional sanctions in the event Beijing doesn’t provide a satisfactory account of COVID-19’s origins.

At the same time, the White House is moving forward with capital restrictions.

All of this comes ahead of the National People’s Congress. Brace for impact.


17 comments on “‘Dangerous Sparring’: Trump Turns Screws On Huawei, Prompting Chinese Threats Against Apple, Boeing

  1. I call bullshit on Trump “not wanting to talk with Xi.” More likely Xi sees a weak US position/outgoing president and refused to speak with Trump, necessitating the characteristic moronic Trump-rant.

    • Agreed. Holding on until November could make Xi’s life incredibly simple. A Biden presidency would likely result in rapid normalization of relations globally.

  2. Hu repeated what Trump said to make bare an obvious point on Trump’s credibility, how is that a misrepresentation or exaggeration (mockery) ? 😂

    If Hu made some comments about injecting him, or some snide joke, yeah sure that’s mockery…

    Brad Pitt’s little episode acting as Fauci .. that’s a good example of mockery and satire

    • Where do you see the word “misrepresentation” or “exaggeration” in this post? (Hint: Neither of those words are in there). Are you familiar with Hu? Mocking the US and the administration is literally his job.

  3. The US has the opportunity to reset our participation in the global economy that maintains a global economy but does not give up key positions that the US should retain for long term positioning and global economic/world peace goals.
    We absolutely should use this opportunity to rethink/ reestablish. There will be some ruffled feathers for sure.

    The scary part is that I fear much of this reshuffling is being done without thinking through the long term implications and working toward a goal of how the US hopes things look in the next decade and beyond.

    • Are you kidding?! Trump planning for the future??! Get serious, all he’s thinking about is the next few months into the election….can’t believe that people can’t see through his pathetic diversion from his totally botched response to the pandemic.

      • You are correct his behavior is the same as how he ended up in bankruptcy so often. When faced with a crisis he consistently picks a dramatic choice that shows his brave side. However that brave side is to brave upcoming side effects or risks inherent with the decision. Then when the risks materialize or the side effects manifest he either capitulates (rarely) or he creates another diversion evidently hoping to cover up the past disaster he created. Then rarely he ends up with a win through deceit and subterfuge, i.e. Impeachment he creates a new disaster as he tries to build himself up, i.e. downplay of Coronavirus. We can go back and look at all the major decisions since he became POTUS and find the same drama cycle.

  4. No kidding. You’re being far too thoughtful. It’s Trump and this disastrous administration we’re dealing with. All this noise is to distract Fox viewers from the immediate and horrific pandemic at hand

  5. I read the tea leaves a little bit different. POTUS likes to strut like a strong man just prior to giving away the store. It is possible this, “Trump said he doesn’t want to speak to Xi” is just bluster prior to capitulation. I am not expecting this as it would reduce the diversion effect from Virus response failures, however he loves thinking himself to be not predictable. However he is predictable as much as anyone, within the bounds of probability.

  6. I expect tariff man to make an appearance soon in an attempt to rescue the administration from a sinking economy and poll numbers, at this point his best hope is to deflect all blame and attention towards China. Just remember, if you have any nasty questions, ask China.

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