The U.S. Commerce Department said on Wednesday
it is adding Huawei Technologies Co Ltd and 70 affiliates to its so-called
“Entity List” - a move that bans the telecom giant from buying parts and
components from U.S. companies without U.S. government approval.
The dramatic move comes as the Trump
administration has aggressively lobbied other countries not to use Huawei
equipment in next-generation 5G networks and comes just days after the Trump
administration imposed new tariffs on Chinese goods amid an escalating trade
war.
The Commerce Department said the move
comes after the U.S. Justice Department unsealed an indictment in January of
Huawei and some entities that said the company had conspired to provide
prohibited financial services to Iran. The department said it has a reasonable
basis to conclude that Huawei is “engaged in activities that are contrary to
U.S. national security or foreign policy interest.”
Huawei reported first-quarter revenue of
$27 billion last month and said it had shipped 59 million smartphones in the
first quarter.
In March 2016, the Commerce Department
added ZTE Corp to the entity list over allegations it organized an elaborate
scheme to hide its re-export of U.S. items to sanctioned countries in violation
of U.S. law.
The restrictions prevented suppliers
from providing ZTE with U.S. equipment, potentially freezing the Huawei rival’s
supply chain, but they were short-lived. The U.S. suspended the restrictions in
a series of temporary reprieves, allowing the company to maintain ties to U.S.
suppliers until it agreed to a plea deal a year later.
In August, Trump signed a bill that
barred the U.S. government itself from using equipment from Huawei and ZTE.
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