President Donald Trump on Wednesday signed an executive order allowing the Commerce Department to stop U.S. companies from doing business with companies “subject to the jurisdiction” of a foreign adversary, clearing a path to bar transactions with Huawei, the Chinese telecom giant that officials have labeled a national security threat.
But asked whether the executive order is meant to take direct aim at Huawei, senior administration officials described it as “company and country agnostic.”
Hours after the White House announced the executive order, the Commerce Department gave notice that it would require U.S. companies to acquire a special license if it wanted to do business with Huawei. Commerce Secretary Wilbur Ross said the move was to prevent China from using American technology “in ways that potentially undermine U.S. national security or foreign policy interests.”
The Trump administration and members of both parties have sought to stop Huawei and ZTE, another Chinese telecom firm said to have ties to the government in Beijing, from accessing the U.S. market. Huawei is one of a handful of companies in the world building 5G-capable wireless equipment, and its gear comes at a lower price point than the tech sold by its competitors.
Government officials have warned that using Huawei equipment could make the United States vulnerable to Chinese espionage. Last year, Congress passed legislation as part of the defense authorization law (PL 115-232) banning government agencies and the military from using either firm’s equipment.
Because both companies “have a significant share of the market for 5G products and associated network devices,” Christopher Krebs, director of the Cybersecurity and Infrastructure Security Agency, told a Senate panel on Tuesday, “efforts to build 5G infrastructure potentially introduces major risks to national security.”
Trump wants to prevent the United States from allowing its communications infrastructure to become “a liability, as opposed to an asset,” officials told reporters on a conference call.
Trump signed the order at the height of trade tensions with Beijing, just days after he increased tariffs on billions of dollars’ worth of Chinese imports.
The order also “declares a national emergency with respect to the threats against information and communications technology,” according to a statement from White House Press Secretary Sarah Huckabee Sanders.
The executive order gives the secretary of Commerce the authority to order a halt to business with companies that pose a risk of “sabotage to, or subversion of” critical communications infrastructure. It was first reported by Reuters on Tuesday evening.
During a briefing in Beijing on Wednesday, the Chinese Foreign Ministry spokesman Geng Shuang accused the United States of “abusing its national power” to “deliberately smear” Chinese companies, according to Reuters.
The order is likely to win plaudits from defense hawks, but it may meet resistance from rural broadband providers. For the most part, the largest U.S. wireless providers have said they do not plan to use Huawei equipment to build their 5G networks. But providers in rural areas are drawn to the lower cost of Huawei’s gear and reluctant to swear off working with the company.
Steve Berry, president of the Competitive Carriers Association, which represents small and medium-size providers, was asked at a Senate Commerce, Science and Transportation Committee hearing in February whether his members would commit to stop using Huawei equipment.
Berry said the lower cost of Chinese equipment helps rural providers remain competitive, but that they share the government’s security concerns. “Our members want to do the right thing,” he said.