As was expected, the Commerce Department has now extended the Huawei ban another 90 days. The U.S. blacklisted Huawei back in May but granted it a nearly three month's reprieve. This means that the extension was going to end today.
Just yesterday, President Donald Trump clearly said that he doesn't want to do business with Huawei as he considers it a national security threat. However, Wilbur Ross, the U.S. Commerce Secretary has relaxed the ban for another 90 days. The new temporary permit will expire on November 19.
A sudden, full-fledged ban will be disruptive, as many American companies do business with the Chinese tech giant. Although the larger telecom companies do not rely on Huawei, the smaller ones, particularly those that operate in rural areas do. The Chinese manufacturer's equipment is cheaper, which is perhaps the reason why rural communications companies use its gears.
The 90 days extension will buy these companies some time to transition away from Huawei made products and replace them with new parts. Similarly, it will also give time to other companies that buy from or sell to Huawei to adjust accordingly.
Additionally, the Entity List will get 46 more Huawei affiliates. This means that now around 100 subsidiaries of the company in different countries including Australia, Belarus, France, Italy, India, and Mexico will not be able to do business with American companies.
The Commerce Department will now require exporters, re-exporters, and transferors to get a certification statement from Huawei entities before using the temporary general license. As for what will happen after the 90-days period, Ross says that plenty of notices have been issued already and that there were various discussions with the President. This implies that the U.S. might not extend the Huawei ban again once this one expires.
Currently, Huawei cannot buy U.S.-made parts for making new gear without special licenses. Since the company is an important client for many American companies, it's not surprising to hear that in last month alone 50 suppliers asked Ross for the license so that they can sell to it. He also expects to receive requests for more. However, he said that no specific licenses are being granted for anything. Back in July, Ross had said that the licenses will be issued only when the U.S. thinks that there is no threat to national security.
The past few months have been troublesome for Huawei. The Chinese giant also expects its revenue to take a hit in the future. Despite the temporary reprieve, many important suppliers severed ties with the company, casting a shadow on its future. That's why the company is trying to wean itself off American companies. Recently, Huawei revealed its own operating system and if worse comes to worst, all its flagships will come with it in the future.
On the other hand, some manufacturers are keen to continue doing business with Huawei. Micron, Intel, and some other suppliers were already able to circumvent the ban without breaking the law. Things might still work out between the U.S. and Huawei, as both are mutually beneficial for each other.