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Trump, Huawei, and 5G: The Saga Won’t Die Down


Jun. 24 2019, Updated 9:00 a.m. ET


According to the Wall Street Journal, citing sources, US President Donald Trump is reportedly considering imposing a requirement that 5G equipment used in the United States must be manufactured outside China. Just last month, Trump barred Huawei from doing business with US companies without prior approval.

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Reportedly, after the Huawei ban, Microsoft (MSFT) and Alphabet (GOOG) dialed back on their business with Huawei. At the same time, we saw a sell-off in chipmakers like Broadcom (AVGO) and Intel (INTC) that sell chips to Huawei. However, chipmakers have outperformed the S&P 500 (SPY) this month. Last week, Trump confirmed after a telephone conversation with Chinese President Xi Jinping that the two leaders would be meeting in Japan on the sidelines of the G20 summit. However, not many are convinced that a trade deal could be signed between the two countries at the event. Notably, President Trump has indicated that Huawei could be discussed as part of US-China trade negotiations.


Huawei has been a flashpoint in US-China relations for quite some time now. The Trump administration has warned its allies against using Huawei equipment for 5G rollout, citing spy threats from China. While some allies like Australia have banned Huawei from participating in their 5G infrastructure, the response from other countries like Germany has been nuanced.

Huawei has been trying to emphasize the fact that its equipment does not impose a security threat and has been calling upon countries including India to make an independent decision on the matter. Huawei’s CFO was also arrested in Canada for allegedly evading US sanctions on Iran. The move led to tensions between Canada and China, triggering tit-for-tat arrests.


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