Foreign Policy

U.S. Might Sanction Foreign Companies That Sell to Huawei

JM Ashby
Written by JM Ashby

In terms of potential foreign policy blunders that could reverberate for many years after Trump is gone, this is fairly high up there.

The Trump regime has already added Chinese-owned telecommunication company Huawei to an export-control "blacklist" that prohibits American companies from their selling their equipment or software to the company, but they're reportedly considering imposing sanctions on foreign companies that sell their goods to Huawei.

The regime will hold a series of meetings beginning this week to determine what the official policy toward Huawei will be going forward and, according to Reuters, the regime has drafted plans that would include placing sanctions on Taiwan's largest chipmaker among other foreign companies.

WASHINGTON (Reuters) - The Trump administration is considering changing U.S. regulations to allow it to block shipments of chips to Huawei Technologies from companies such as Taiwan’s TSMC, the world’s largest contract chipmaker, two sources familiar with the matter said. [...]

The measure would be a blow to the world’s no. 2 smartphone maker as well as to TSMC, a major producer of chips for Huawei’s HiSilicon unit and mobile phone rivals Apple Inc and Qualcomm Inc.

“What they’re trying to do is make sure that no chips go to Huawei that they can possibly control,” the second source said.

To target global chip sales to Huawei, U.S. authorities would alter the Foreign Direct Product Rule, which subjects some foreign-made goods based on U.S. technology or software to U.S. regulations.

Ordinarily I would say not many things could threaten the alliance that Taiwan and the United States share against China, but Trump isn't normal, is he?

I would not suggest that Taiwan will immediately leap into the arms of China if Trump imposes sanctions on their most significant industry titan, but this how cracks initially form in strategic alliances. Cracks can eventually grow and succumb to pressure.

If they go through with this, the Trump regime will give Taiwan and its people a new reason to view closer ties with China as more beneficial to them than traditional ties to the United States. China is, after all, the largest consumer market in the world and their largest customer.

Our alliances aside, this could also be bad news for the global economy at a time when the coronavirus is already wreaking havoc on supply chains particularly in the tech industry. Wall Street actually took a dump this morning after Apple announced that they'll likely miss their quarterly revenue forecast because of the virus. Apple is one of TSMC's biggest customers.

The idea that Taiwanese-made computer chips that are partially based on American tech pose a threat to American national security if they're procured by Huawei is a fantastical stretch that no one in the world is going to believe.

  • muselet

    Under the draft proposal, the U.S. government would force foreign companies that use U.S. chipmaking equipment to seek a U.S. license before supplying Huawei – a major expansion of export control authority that could anger U.S. allies worldwide.

    [emphasis added]

    You’ve gotta love the understatement there.

    Taiwan is unlikely to turn to China over this—that would be like drawing to an inside straight: not impossible, just very improbable—but there will be some reevaluation of the US-Taiwan relationship.

    This proposal doesn’t pass the giggle test, but it will allow Donald Trump to preen and posture as tough! during the general election season, which is all that really matters to him..