Dec 7, 2018

Axios PM

By Mike Allen
Mike Allen

Situational awareness: Former Secretary of State Rex Tillerson has drawn President Trump's ire by saying he repeatedly had to talk his former boss out of breaking the law.

1 big thing: Canada caught between U.S. and China

Photo: Jeff Vinnick/Getty Images

The freshest battleground in the U.S.-China trade war is currently playing out in Canada, where the CFO of Huawei faces extradition for allegedly violating U.S. sanctions on Iran.

Why it matters: This is both deeply personal (CFO Wanzhou Meng is the daughter of Huawei's founder) and precarious, given the accusations. The U.S. nearly gave ZTE a death sentence for similar allegations earlier this year, before President Trump backed off.

The allegations, per the NYT:

  • From "2009 and 2014, Huawei used a Hong Kong company called Skycom Tech to make transactions in Iran and do business with telecom companies there, in violation of American sanctions against Iran."
  • "Banks in the United States cleared financial transactions for Huawei, inadvertently doing business with Skycom, he said."
  • "The banks were 'victim institutions' of fraud," Canadian prosecutors said.
  • Flashback to 2013: "Exclusive: Huawei CFO linked to firm that offered HP gear to Iran" (Reuters)

Between the lines, via Axios China's Bill Bishop:

  • "The arrest will probably not derail the U.S.-China trade talks."
  • "That could change if there are additional U.S. moves against Huawei, especially if they come from the executive branch."
  • "Any foreign and especially U.S. tech firm that has supply chain reliance on China needs to be deep into planning for reducing that reliance, no matter how hard, painful and expensive such a shift would be."
  • "Frankly, boards of directors of those firms are negligent at this point if they are not pushing for this."

Bottom line: This could be a real test case for whether the U.S. will have teeth in its challenge of Chinese tech aspirations.

Bonus: Pic du jour
Photo: Chip Somodevilla/Getty Images

James Comey arrives at the Rayburn House Office Building before testifying to the House Judiciary and Oversight and Government Reform committees today.

2. What you missed
  1. Trump's staff changes: He's nominating H.W. Bush's Attorney General Bill Barr for the same role, and Heather Nauert for a downgraded U.N. ambassador job.
  2. Russia and OPEC have struck a deal to cut oil production by 1.2 million barrels a day that could make a dent in the oil supply glut. Go deeper.
  3. Jobs numbers: 155,000 jobs in November, less than the 195,000 expected. Unemployment held at 3.7%. Wages grew 3.1% year-over-year. Go deeper.
  4. Elon Musk admitted that he is "somewhat impulsive" in an interview with Lesley Stahl for "60 Minutes." When asked what he felt about being called erratic or unstable, he said, "I'm just being me." Go deeper.
  5. German Chancellor Angela Merkel will be Harvard's guest graduation speaker in the spring.
3. 1 music thing

"Kendrick Lamar, Drake, Brandi Carlile and hit producer Boi-1Da led the nominees list for the 2019 Grammy Awards, which were announced this morning," Variety reports.

  • Between the lines: "The Recording Academy received heavy criticism in the wake of last year’s awards over a lack of diversity ... and it has responded with a list that is diverse both racially and in terms of gender."

The list.

Mike Allen