White House considering executive order to block Huawei, ZTE purchases

The Trump Administration is considering an executive order which would prohibit US service providers from using networking equipment provided by Huawei and ZTE. While the final verbiage of the executive order hasn’t yet been finalized, the report claims that it could be completed and signed in early January. Huawei and ZTE would likely not be called out by name in the executive order, but the verbiage would make it clear that equipment manufactured by the two Chinese companies would not be allowed within the United States.

As things currently stand, T-Mobile AT&T, Verizon and Sprint to not use any network equipment provided by Huawei or ZTE. That being said, several regional service providers which offer cellular service to rural customers do rely on some Huawei network equipment. Current estimates show that Huawei’s network equipment only accounts for 1% of the market.

What’s unclear is if the executive order will require service providers to remove Huawei and ZTE network equipment. This would be a costly and time consuming endeavor for smaller service providers which don’t have deep pockets.

The reason for the expected ban on ZTE and Huawei network equipment is due to security concerns. US security agencies have been weary of the close relationship that ZTE and Huawei have with the Chinese government. While none of these agencies have been able to show concrete evidence to back up their claims, they all have implied that the information that travels through Huawei and ZTE’s network equipment could easily fall into the hands of the Chinese government.

If enacted, the Executive Order increase tensions between the US and China and add more fuel to the trade war that Trump has been instigating against China. China could easily see this move as an act of aggression and increase prices Chinese-build products to the US.

Source: Reuters