President Donald Trump on Wednesday has signed an executive order to ban foreign telecom companies that could be a threat to national security. The decision has further escalated the US-China trade wars as it also bars Americans from using Chinese telecom company Huawei’s products; the company is believed to pose a risk to US national interests.
Huawei to Face Ban for Being China’s Spy Tool
China in the past has faced accusations of using companies like Huawei as spy tools. The executive orders issued by Donald Trump didn’t name any company in particular but they are believed to have targeted Huawei.
Lu Kang spokesperson for the Chinese foreign ministry has reportedly opposed this act by considering it an imposition of sanctions by the US government on Chinese companies.
The spokesperson for the foreign ministry of China urged the USA to stop making false accusations and assured that if such acts continued China would take all necessary action to safeguard its interests.
Impact of Barring the 5G Company
Barring Huawei from the US will have little to no effect on the company’s profits as the majority of its supply chain is based in Asian countries. The barring of the company will, however, affect the telecom industry as it is the largest manufacturer of switchboard in the world. The action will also impact the 5G deployment in the United States as the Chinese companies have warned.
Such an action from the US may also close the door of the Chinese Market to already overrated Apple’s iPhone and other products of the company as a possible retaliation.
Opinions on the Latest US-China Episode
The current US-China situation is of great concern as it can impact businesses at a micro-level and economy at a macro level even if on a small extent. According to some experts, the US is taking a bigger bite than it can chew. Tensions between China and the US were already very high over the South China Sea incidents. Further escalation of a trade war is likely to worsen the situation.