The Trump administration on May 15, imposed an extreme penalty on Huawei that bars U.S. companies from using telecommunications equipment made by Chinese company Huawei and its 70 subsidiaries. It is very difficult for it to do business with any U.S. company. The U.S. Commerce Department’s Bureau of Industry and Security said it was adding Huawei Technologies Co. Ltd. to its “Entity List,” known to some as the “death penalty.” This listing makes it virtually impossible for companies to survive once U.S. firms are discouraged from doing business with them. The Commerce Department said it had reached this decision because Huawei “is engaged in activities that are contrary to U.S. national security or foreign policy interest.” Consequently, Huawei Technologies could soon be cut off from its U.S. suppliers, a punitive action for violating U.S. sanctions that almost put crosstown rival ZTE out of business last year. U.S. companies currently provide more than a third of Huawei’s components, making them the company’s biggest group of suppliers, even larger than those on the Chinese mainland, according to research house Jefferies. Taiwan and Japan each account for more than 10% of its components.
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