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The Commerce Department says new, sweeping restrictions on U.S. companies doing business with Chinese tech giant Huawei went into effect today. The move could deal a devastating blow to Huawei, but also seriously hurt companies across the globe, including in the U.S. NPR's Jackie Northam has this report.
JACKIE NORTHAM, BYLINE: The clampdown on Huawei came when the Commerce Department announced it was putting the Shenzhen-based company and 68 of its subsidiaries on an entity list because of national security concerns. Huawei is the world's largest manufacturer of telecommunications equipment, and the news has sent a jolt through its vast global supply chain.
SAMM SACKS: I think, frankly, industry was shocked. No one expected this development.
NORTHAM: Samm Sacks is a cybersecurity policy fellow at New America, a Washington D.C.-based policy think tank. She says many industry insiders didn't think the Trump administration would actually go through with these restrictions because of their impact on U.S. companies like Qualcomm and Intel that provide Huawei with critical components, such as computer chips, worth billions of dollars every year.
SACKS: Huawei relies on U.S. components - specifically, certain kinds of advanced chips - for all of the equipment that it sells all around the world.
NORTHAM: Now dozens of U.S. suppliers will have to apply for a license if they want to do business with Huawei. More than 60 foreign companies will also be affected if their products contain U.S.-made components. Those licenses could take weeks or months if they're granted at all.
Adam Segal directs the digital and cyberspace policy program at the Council on Foreign Relations. He says the administration is taking a big gamble with this move.
ADAM SEGAL: And we just don't know how the supply chains are going to respond. But I think, you know, you're going to ask a lot of the U.S. tech companies to bear a large part of the cost of this with an uncertain outcome.
NORTHAM: Will Carter with the Center for Strategic and International Studies says the administration is concerned that Huawei could use its equipment to spy on the U.S. and its allies.
WILL CARTER: The connections between the Chinese government and Huawei are well-documented and go back a number of years. And the United States has clear evidence of Huawei supporting Chinese government intelligence operations.
NORTHAM: Huawei is one of the top developers of the next generation of wireless technology known as 5G. The Commerce Department's move could stall the global rollout of that technology. Segal says the timing of the administration's move to shut out Huawei could also have a lot to do with the stalled trade negotiations between China and the U.S.
SEGAL: I think it really is a effort by those in the Trump administration to signal resolve to the Chinese that the U.S. is really willing to exact as much punishment and pain on the Chinese side as it can.
NORTHAM: New America's Sacks says the hardball tactic of curbing Huawei could be part of the trade negotiations and could be reversed if the administration gets its way. She points to another Chinese tech giant, ZTE, which ended up on the entity list last year.
SACKS: Very shortly after they put ZTE on the list, they actually walked back. President Trump got a call from President Xi, and he negotiated his way out of it. So one of the big questions is, could Huawei meet the same fate?
NORTHAM: In a statement, Huawei warned of the economic harm the new restrictions pose and said it will try to find a resolution to the situation. China's Foreign Ministry also weighed in, saying the U.S. was wrong to impose unilateral sanctions. Jackie Northam, NPR News, Washington. Transcript provided by NPR, Copyright NPR.