May 16, 2019 08:05 AM EDT
On Wednesday, President Donald Trump signed an executive order prohibiting US firms from using telecom gear from sources that the administration considers national security threats. The decision risks intensifying the current friction with China as the two nations are still in conflict over whether Huawei - the world's largest provider of telecommunications equipment - poses a spying risk to Western infrastructure networks.
White House officials refused to identify China and Huawei as the intended target of the executive order. However, shortly after the order was issued, the Commerce Department formally added Huawei to the list of companies the US government considers to be ignoring and damaging to American interests. By adding Huawei to the so-called Entity List, the Trump administration will guarantee Huawei will be covered by the new executive order.
The executive order - along with Huawei's addition to the list - comes as Trump is seeking to apply additional pressure on China in trade talks, with tougher tariffs affecting billions of dollars of goods. Senior administration officials told reporters that the document echoes Trump's commitment to keeping the nation's networks secure from foreign antagonists. And other US officials have directly lobbied allies not to use Huawei gear, arguing that the company's products could offer the Chinese government a way to infiltrate sensitive US communications. The Trump administration will develop more specific rules over the next 150 days, according to one senior official, and US businesses will be encouraged to offer any advice or critics.
Huawei said banning it from the United States would eventually damage American businesses and consumers, and impede US efforts to acquire 5G technology. "Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment," the company said in a statement.
The plan could prove pricey to small and rural wireless carriers, many of whom use equipment from Huawei due to its lesser cost when related to the next largest competitors, Europe's Nokia and Ericsson. Most large carriers don't use Huawei equipment.
While the executive order would apply to past purchases of telecom equipment, officials declined to say whether the government would help carriers pay to remove the gear from their networks - or what the punishment could be for companies that violate the new policy.
The order left American telecom companies that use foreign-made equipment wondering just how it would be implemented. "We'll just have to see what it is and we'll have a definite reaction one way or another," said Craig Gates, the CEO of Triangle, a small network that uses Huawei gear.
He said that members of several trade associations have already been considering whether there would be federal help to counterbalance the costs of removing the equipment. "Because when all this equipment went in there was no talk of these issues," he said. "Would there be help to replace it?"
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