The Pentagon overturned their own decision to block any more crackdowns on Huawei, the Chinese tech company. The change will mean that it will become a lot harder for US firms to provide materials to Huawei.
An important meeting will be held on February 28th with high-ranking officials attending such as Wilbur Ross, the Commerce Secretary, Defense Secretary Mark Esper and Treasury Secretary Steven Mnuchin, and this is where the final decision will be made.
Prior to this, Pentagon had shown reservations on pushing even more restrictions on Huawei, as they noted that US companies in the industry would be impacted by this negatively. It also added that the absence of business with Huawei will wreck R&D activities that these companies implement.
Although, regardless of these points, the Defense Department’s undersecretary for policy, John Rood had overruled it.
Looking into current policies, high-tech products and materials shipped to China that come from other countries with 25% or less US-made components might not require a licence. Subsidiaries or foreign partners are being used to export materials to Huawei from US companies.
But now the US is looking to make the limit down to 10% which makes it very strenuous for the Chinese giant and its subsidiaries to acquire components such as chips, semiconductors etc, that come from the US.
The Commerce Department had maintained that it “continuously reviews and updates export controls to address the challenges of accelerating technology diffusion and innovation.”
“Scope of the current de minimis threshold for controlled items, as well as the foreign direct product rule, to listed entities, are controls under review,” it added.
President Trump’s administration has been adamant on other countries not working with Huawei since they had accused the firm of working with the Chinese government and had blacklisted the tech company.