It has been called a cold war in technology between the US and the second largest global phone makers, Huawei. The US government had blacklisted the Chinese-owned tech firm from obtaining supplies from US companies. Although this had led to ripple effects for Huawei, the heart of the American tech industry is also getting hit from the effects of the war.
President Donald Trump welcomed the month of August with an announcement on Twitter that an additional 10% tariff will be levied on the remaining $300b of goods from China that enter into the United States.
President Donald Trump had issued a statement promising to lift the ban on Huawei; however, things have taken a new turn with his recent plan to slam new tariffs on Chinese goods. This decision could threaten the promised suspension of punishment for Huawei who have looked forward to embarking on a peaceful trade with their American suppliers.
Before the latest outburst from the US president, there had been tensions between both warring factions. Huawei, the world’s largest global telecommunications equipment maker and a leading smartphone brand has been on US blacklist since May, after it was accused of posing security threat to the US.
How it started
Huawei was saddled with the responsibility to upgrade the country’s network to the 5th generation and work was in progress, until the US government decided to retract their decision.
Firstly, it accused Huawei of a possible military espionage. The US president and other members of the administration insisted that Huawei’s equipment could be used as surveillance to spy on the US, because the company has possible ties with Beijing, a claim that the company has repeatedly denied.
Secondly, it mobilised its allies like South Korea, Japan, and other members of the EU to do likewise. This decision not only caused a strain between South Korea and Huawei which are supposedly business partners and depend mutually on each other’s equipment for survival, it also resulted in a sales plunge over the period.
Afterward, US companies like Google, Facebook, Android and Twitter withdrew their licenses from Huawei. In other words, apps like Chrome, Google maps, WhatsApp, Instagram, Snapchat and the others would no longer be installed on Huawei phones waiting to hit the market. It was a challenging moment for Huawei.
How the ban has affected both factions
It is very evident that the US was doing everything possible to push Huawei out of business. Imagine using a mobile phone without Facebook, Google map, Twitter and Android OS? That would seem like you regressed back to the stone age, like in the days of Nokia 3310!
However, some US firms have also shared in the loss. According to statistics, Huawei purchased components valued at $70b; out of this, $11b went to Qualcomm, Intel and Micron Technology, all American firms. Some reports have it that some US companies found a way to sell their equipment to Huawei shipping from other countries with a claim that they were American-made goods.
Chipmakers in the US are asking the president to lift the ban and allow them trade freely with Huawei as their businesses are hurting too. Qualcomm and AMD announced that sales have plummeted since the ban.
What the new 10% tariff means
The new 10% tariff only reignites the trade war which has simmered down. Although he didn’t mention anything about the existing trade war, it complicates the last plan to ease the tension between both factions.