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Illustration: Eniola Odetunde/Axios

A new regulation announced last week requires foreign semiconductor suppliers that use U.S. designs to get a license from the U.S. government before selling to Huawei. Business groups aren't exactly welcoming the move with open arms.

Why it matters: The new restrictions may reduce revenues and hobble research and development for U.S. companies.

What they're saying: “It could make it very difficult for U.S. companies who have been selling their products to Chinese companies," said Doug Barry, communications director at the U.S.-China Business Council.

  • "That will affect their revenues, their employment, their supply chain [and] the competitiveness of their products."
  • A knock-on effect is that research and development, in particular, could take a hit, as companies won't be able to reinvest as much revenue into next-generation products.

Background: The U.S. first placed export limits on Huawei in May 2019. But those guidelines were porous. Huawei could still get U.S. products through third-party vendors. Now that loophole is closed.

What to watch: Other Chinese companies will be affected too, particularly if the Chinese government chooses to retaliate by limiting U.S. access to China's markets.

  • "International information and communication technology manufacturers play a vital role in supporting connectivity and economic growth in China and around the world," said Patrick Lozada, director of global policy at the Telecommunications Industry Association.
  • "Potential retaliation aimed at international suppliers could undermine business confidence and limit choices for Chinese companies and consumers."

Go deeper: Huawei makes its case against U.S. hostilities

Go deeper

Aug 26, 2020 - World

U.S. targets Chinese individuals, companies over escalation in South China Sea

Fishing vessels are seen in the South China Sea Photo: Artyom Ivanov/TASS via Getty Images

The Department of Commerce on Wednesday blacklisted 24 Chinese firms for "helping the Chinese military construct and militarize the internationally condemned artificial islands in the South China Sea."

Why it matters: The move comes as the Trump administration continues to ramp up pressure on Beijing amid escalating tensions in the disputed region.

In photos: D.C. and U.S. states on alert for pre-inauguration violence

National Guard troops stand behind security fencing with the dome of the U.S. Capitol Building behind them, on Jan. 16. Photo: Kent Nishimura / Los Angeles Times via Getty Images

Security has been stepped up in Washington, D.C., and state capitols across the U.S. as authorities brace for potential violence this weekend.

Driving the news: Following the Jan. 6 insurrection at the U.S. Capitol by some supporters of President Trump, the FBI has said there could be armed protests in D.C. and in all 50 state capitols in the run-up to President-elect Joe Biden's inauguration Wednesday.

14 hours ago - Politics & Policy

The new Washington

Illustration: Sarah Grillo/Axios

The Axios subject-matter experts brief you on the incoming administration's plans and team.