Treasury Secretary Mnuchin says that Trump could loosen the noose on Huawei if trade talks progress

Treasury Secretary Mnuchin says that Trump could loosen the noose on Huawei if trade talks progress
Late last month, U.S. President Donald Trump hinted that the U.S. might use Huawei as a bargaining chip to get favorable terms from China in any trade agreement between the two countries. Reuters reports today that Treasury Secretary Steve Mnuchin echoed Trump by stating that the president could loosen restrictions on Huawei if progress is made in the trade war with China. "If China wants to move forward with the deal, we’re prepared to move forward on the terms we’ve done," Mnuchin said. "If China doesn’t want to move forward, then President Trump is perfectly happy to move forward with tariffs to rebalance the relationship."

The trade war started because the president considered the U.S. trade deficit with China to be an indication that the country was taking advantage of the U.S. Many economists say that the deficit actually means that U.S. consumers are wealthier than their Chinese counterparts and can afford to buy more exports than Chinese consumers can. Trump also recently tweeted that the tariffs mean that the Chinese are paying millions to the U.S. Treasury. That is an absolutely false statement; the tariffs are taxes that U.S. companies pay and they can either eat the cost of paying the higher taxes or pass it on to consumers. For example, Apple's cases for the iPhone and iPad are currently slapped with a 25% tariff. Apple has decided to eat the cost of the tax so that it can keep the prices of the accessories unchanged. But this move will eat into Apple's profit margins.

Earlier this year the U.S. indicted Huawei on various charges including bank fraud

It is important to remember that Huawei's placement on the Entity List has to do with security issues. The U.S. has long considered Huawei to be a national security threat because of the possibility that the communist Chinese government will demand that Huawei spy on its behalf; this is allowed under Chinese law and has led U.S. lawmakers to fear that Huawei products contain a backdoor that will send secrets to Beijing. The company has long denied this and has even offered to sign a no-spy agreement with any country.

If the U.S. does not loosen the restrictions on Huawei the company will be forced to use its own operating system on future models, and design chipsets based on a new architecture. The company shipped over 200 million handsets last year and during this year's first quarter it was the second largest smartphone manufacturer in the world trailing only Samsung. The company had its sights set on taking out Samsung for the top spot in 2020. Now that doesn't seem likely at all with Strategy Analytics expecting a decline of as much as 24% in Huawei's smartphone shipments this year and another 20% drop forecast for 2020.

Earlier this year, the U.S. indicted Huawei, some of its affiliates, and its CFO Meng Wanzhou on a variety of bank fraud charges. The DOJ claims that the company tried to cover up the business it allegedly did with Iran in violation of international economic sanctions. In addition, the DOJ indicted Huawei on criminal charges related to its alleged theft of T-Mobile trade secrets. This all dates back about five years when T-Mobile sued Huawei in civil court for stealing actual parts belonging to its phone testing robot, Tappy. After paying T-Mobile nearly $5 million as ordered by the court, Huawei now faces criminal charges over the same incident.

If the U.S. does relax some of the restrictions on Huawei or takes the company off of the Entity List, perhaps Huawei will be able to return to business as usual. If the timing is right, perhaps it won't be too late for the manufacturer to make the Huawei Mate 30 the powerhouse that everyone expected earlier this year.



1. kiko007

Posts: 7525; Member since: Feb 17, 2016

So blackmail basically? That seems pretty par for the course for this administration, so not really too surprising.

2. Man_Utd

Posts: 190; Member since: Feb 03, 2015

I love how our president is willing to compromise our national security for his trade war.

3. mootu

Posts: 1541; Member since: Mar 16, 2017

Because there is no national security threat. Rural America has been running on Huawei 4G networks for years, there hasn't been any problems. Trump has called German cars a national security threat, steel from anywhere other than the US is a national security threat. Anything that Trump gets in a tizz about he just labels it a national security threat and gullible Americans just take him at his word. It's his favourite bully boy tactic along with tariffs, he doesn't know any other way.

6. surethom

Posts: 1751; Member since: Mar 04, 2009

5G is different to 4g, as with 5g Everything will communicate with Everything so needs way more trust & security, but Huawei Phone division has nothing to do with the 5g infrastructure, that division is just being used as a pawn in a stupid trade war.

7. jacky899

Posts: 434; Member since: May 16, 2017

The ONLY surveillance hack ever found in Huawei's equipment to date was implanted by the NSA. Edward Snowden leaked a document in 2012 that show how the NSA's Tailored Access Operations unit conducting covert operation “Shotgiant” beginning in 2007 had succeeded in infiltrating computer servers in Huawei's headquarters in Shenzhen, China by 2010. The success allowed the agency to spy on email communications of Huawei employees, including founder of Huawei, as well as steal the source code for specific Huawei products that could be used to exploit those products for espionage or cyberwarfare purposes. The purpose was to find ties between Huawei and the Chinese gov and also to give NSA the ability to roam through computers and telephone networks of all nations (allied or not) that use Huawei equipment giving the US the ability to conduct surveillance, and offensive cyber operations. No evidence of backdoors or Huawei working with the Chinese government were found after a decade of spying and digging into Huawei’s system and devices by a huge NSA taskforce of expert hackers and engineers.

4. irwan92

Posts: 53; Member since: Feb 12, 2013

This drama shows that Huawei is in no guilty. Huawei just a victim in this trade war. Thats silly trump

5. surethom

Posts: 1751; Member since: Mar 04, 2009

This just proved Huawei Phone division (not 5g infrastructure division) is being used in the trade war with China & nothing to do with security.

8. jacky899

Posts: 434; Member since: May 16, 2017

The export deficit subject between China and US is pure American government propaganda. What they don't tell you is the majority of these products exported from China are Western brand products, mainly American such as, Apple, Nike, Starbucks coffee, Cisco, Dell, HP, Vizio, Intel etc., where 98% of the profits go back to the US. In fact many Chinese manufacturers don't even want to manufacture for US companies anymore because the profit margins are razor thin if any at all. On the other hand, how many mainstream, profitable Chinese brand products do you see entering the U.S.? The only major ones would have been Huawei and ZTE, which got shot down by the protectionistic US government just like many other Chinese companies who have tried in the past. On the contrary, if you go to China, you will see the presence of American and western corporations are far more prevalent than you see Chinese presence in the US (E.G., McDonalds and KFC are the #1 and #2 restaurant franchise in China and you find one in almost every single city block). American brands/companies that dominate the Chinese market in the $billions including Nike, New Balance, Tesla, Apple, General Motors, Coach, Starbucks, Microsoft, KFC, McDonalds, Subway, Wendy's, Gillette, Coca Cola, Pepsi, Adidas, Intel, AMD, Nvidia, Walmart, etc. etc. and the Chinese are perfectly content with the situation. Just imagine if it was the other way around where profitable Chinese presence dominated US cities and way of life... Also the trade deficit numbers are bogus. For example, China only gets paid $5-$8 to manufacture an iphone. The rest are component costs that goes to Japan, Korea, Taiwan, etc. However, the full cost of the phone is counted in the trade deficit. For this tiny bit of money that goes to China, a whopping amount goes to the US (1/3 of the world's Apple users are in China). Also American products manufactured in China like GM cars, which sell more in China than in the US, are not counted into the deficit.

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