U.S. Holds Off on Huawei Licenses as China Halts Crop-Buying
The White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei after Beijing said it was halting purchases of U.S. farming goods, according to Bloomberg, citing people familiar with the matter.
Commerce Secretary Wilbur Ross, whose department has vetted the applications to resume sales, said last week he’s received 50 requests and that a decision on them was pending. American businesses require a special license to supply goods to Huawei after the U.S. added the Chinese telecommunications giant to a trade blacklist in May over national-security concerns.
The U.S. decision rattled stocks, bonds, currencies and even soybean prices around the world. Huawei suppliers Micron and Western Digital declined as much as 2.2% after news of the delay in license approvals, while Qualcomm, Xilinx and NeoPhotonics all fell more than 1% in after-hours trading. Huawei’s dollar bond spreads widened by 10 to 15 basis points Friday morning, while the Australian dollar and offshore yuan weakened versus the greenback and the yen gained.
President Donald Trump said in late June after agreeing to a now-broken trade truce with Chinese President Xi Jinping in Japan that some restrictions on Huawei would be loosened. But that promise was contingent upon China beefing up its purchases from American farmers, which Trump has complained the country has failed to do.
In the past week tensions have escalated further as Trump said he would impose a 10% tariff on $300 billion of Chinese imports as of Sept. 1 and his Treasury Department formally labeled China a currency manipulator. Still, Trump said earlier there were no plans to reverse the decision he made in Japan to allow more sales by U.S. suppliers of non-sensitive products to Huawei. He said the issue of Huawei is not related to the trade talks.
Companies such as Xilinx and Micron have publicly said they’ve applied for licenses and called on the U.S. to allow them to resume doing business with Huawei. They argue that many of their products are easily obtainable from their overseas rivals, making a ban ineffective and also harmful to the industry that the trade dispute with China is supposed to be helping. Some U.S.-based makers of electronic components have already reported earnings and given forecasts that show the negative effects of the trade dispute.