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Despite China concessions, Trump encouraged to keep pressure on Huawei

Senators from both parties responded to Trump's move with either words of caution or outright dissension.
Image: Visitors walk past the Huawei booth at the Mobile World Congress in Barcelona on Feb. 27, 2017.
Visitors walk past the Huawei booth at the Mobile World Congress in Barcelona, Spain, on Feb. 27, 2017.Eric Gaillard / Reuters file

A trade bargaining chip or a security threat? For Huawei, the two are not mutually exclusive.

President Donald Trump announced Saturday that the Chinese telecom giant, which became one of the major pivot points of the trade negotiations between the United States and China, would be free to buy some products from U.S. tech companies.

The announcement was a change of course for the U.S., which in late May added Huawei to a list of companies deemed a threat to national security, effectively preventing it from doing business with American companies without government approval.

Trump tweeted that Huawei will be allowed to buy products that do not have an impact on U.S. national security, though he did not reveal exactly where that line might be. The next day, White House economic adviser Larry Kudlow said on "Fox News Sunday" and CBS' "Face the Nation" that the announcement was not an indication that the U.S. was relieving pressure on Huawei, adding that sales would be allowed for "general merchandise."

Huawei's emergence as a global tech power — most notably one that is key to the much-hyped creation of the next-generation 5G wireless internet networks — has opened the door to broader questions about how much the U.S. can trust China even as the two countries' tech industries grow further intertwined. China's willingness to engage in cyberattacks, steal intellectual property and exert control over Chinese companies have made Huawei the focus of an existential question: how much should a Chinese company be at the center of important U.S. tech infrastructure?

But it wasn't until Trump launched a trade war with China that Huawei also became a leverage point for Trump, alternately increasing and relieving pressure on the company in order to get larger concessions from China. That has been cause for alarm among politicians and security experts who have recommended a hard line toward the company.

Senators from both parties responded to Trump's move with either words of caution or outright dissension.

"If President Trump has agreed to reverse recent sanctions against #Huawei he has made a catastrophic mistake," Sen. Marco Rubio, R-Fla., tweeted Saturday, adding that he would pursue legislation to put restrictions back in place.

“I would like to see the details, but we need to remember that Huawei represents a threat to our national security," Sen. Mark Warner, D-Va., said in an email. "Allowing Huawei to participate in building our next generation communications networks should be unacceptable for everyone. If the President’s deal goes too far, Congress would certainly act to reverse it.”

Sen. Lindsey Graham, R-S.C., appeared on CBS' "Face the Nation" on Sunday and made clear that he still sees Huawei as a threat and said he hoped the president's concessions did not go too far.

"If they're minor exceptions, that's okay, but if we're selling Huawei major technology, that would be a mistake," Graham said.

Nate Jones, co-founder of the consulting firm Culper Partners and a former deputy general counsel for Microsoft, said that it's hard to parse what part of Huawei's business relationships with U.S. companies could not be construed as touching national security.

He said that even if the Trump administration were to keep in place the ban that prevents companies from buying Huawei products to build out American infrastructure, easing restriction on what Huawei can buy from U.S. companies would only make the company's products more attractive abroad, where Trump has less control over what countries and companies do.

"You really lose trust in the security of those things pretty quickly," said Jones, who also served on the National Security Council in the Obama administration.

Though Kudlow sought to assuage worries that Trump had given in, the tech industry reacted to the news with optimism that business with Huawei would soon resume. The Semiconductor Industry Association, a trade group made up of many tech companies that make crucial tech hardware including the computer chips necessary for modern computing, applauded the move.

“The progress made today by President Trump and President Xi [Jinping] in Osaka, Japan, is good news for the semiconductor industry, the overall tech sector, and the world’s two largest economies," John Neuffer, president and CEO of the Semiconductor Industry Association, said in an emailed statement. "We are encouraged the talks are restarting and additional tariffs are on hold and we look forward to getting more detail on the president’s remarks on Huawei.”

Investors shared in the cheerfulness. Shares in chipmakers rose sharply Monday.