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Good morning, Clay Chandler writing for Adam today. President Trump will sign an executive order this week barring U.S. companies from using telecommunications equipment produced by firms deemed a risk to national security, several wire services report. The measure won’t name specific countries or companies, but will effectively ban Chinese telecom giant Huawei Technologies from competing in the U.S. market–ratcheting up trade tensions between the world’s two largest economies.
The administration’s China hawks have urged the de facto ban on Huawei for more than a year. The order would invoke the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency threat. Trump is said to have demurred asserting such powers previously in hopes of concluding a broader trade agreement with China. His willingness to sign the measure now suggests he’s digging in for a protracted standoff.
The Chinese, too, are hardening their position. In a speech in Beijing Wednesday, Xi Jinping warned it would be “stupid” and “disastrous” for one civilization to force itself on another. He didn’t name names, but it was pretty clear whose “civilization” he had in mind.
The United States blames China for the sudden collapse in trade negotiations, claiming that last weekend Beijing backtracked on a host of prior commitments to liberalize its economy and dismantle subsidies for homegrown companies. On Monday, Trump cited China’s reversal on a deal that was “95% there” for his decision Friday increase tariffs to 25% on $200 billion of Chinese products.
Beijing denies reneging, and has retaliated by declaring it will raise tariffs on $60 billion of U.S. imports starting next month. The rising tensions have already hit the stock prices of U.S. tech giants like Apple, Intel and Hewlett Packard Enterprise, causing losses of at least 10% on each over the past week.
Trump insists he enjoys a close personal relationship with the Chinese leader. He claims Xi wrote him a “beautiful letter” after talks between U.S. trade representative Robert Lighthizer and Xi’s emissary Liu He broke down. But such statements belie the new chill that has settled over U.S.-China relations. Whatever their personal rapport, it’s increasingly clear the two leaders have misread each other. Trump’s Huawei ban seems certain to invite a Chinese reprisal.
Trump and Xi are scheduled to meet at a summit for leaders of the G-20 nations in Osaka next month. But as tensions escalate, the prospects that meeting will achieve a breakthrough seem remote.
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