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President Trump has issued an executive order declaring a national emergency and prohibiting U.S. companies from using telecom services that are solely owned, controlled, or directed by a foreign adversary, clearing the way for a ban on the Chinese-owned Huawei.
"This Executive Order declares a national emergency with respect to the threats against information and communications technology and services in the United States and delegates authority to the Secretary of Commerce to prohibit transactions posing an unacceptable risk to the national security of the United States or the security and safety of United States persons."— Press Secretary Sarah Sanders
Why it matters: The U.S. and other governments have accused China of sabotaging Huawei equipment to use for espionage and of profiting from stolen intellectual property. As Axios has previously reported, Huawei is poised to claim close to half of the 5G market, nudging the technological center of gravity away from western telecom vendors and sounding alarms about China's ability to spy on Americans.
- Fears are mounting that a 5G equipment market dominated by China will give the authoritarian regime greater access to the explosion of data that will flow across 5G networks.
- Big U.S. carriers already cannot and don’t use Huawei gear. However, Trump's would affect rural carriers who do use Huawei to save on costs. These carriers are more price sensitive because they have to cover more area with fewer subscribers.
The big picture: Trump's move comes at a moment of heightened U.S.-China trade tensions, with negotiations collapsing last week after China reportedly reneged on many of its earlier commitments. IP theft is among one of the main American grievances that prompted Trump to launch his trade war in the first place.
- The U.S. has ratcheted up tariffs from 10% to 25% on $200 billion worth of Chinese goods, and is currently weighing adding tariffs to the remaining sum of imports — worth about $325 billion.