US Defense Department Objects to Tougher Huawei Restrictions

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The United States Department of Commerce has put on hold a rule aimed at further reducing sales to Huawei amid push-back from the US Department of Defense.

The move leaves the proposal in jeopardy, but US President Donald Trump’s administration plans a high-level meeting next week to discuss the issue.

The rule change, which multiple government agencies were reviewing, would close a loophole that allowed technology companies like Intel and Micron to continue shipping chips, software and other products to Huawei despite a ban that prevented the Chinese company from buying some American products.

Government officials have objected to the tougher restrictions, arguing they could discourage the use of American components abroad, weakening American firms and the country’s technological competitiveness.

The Commerce Department in May placed Huawei on a trade blacklist, citing national security concerns. That allowed the US government to restrict sales of US-made goods to the company and a small number of items made abroad that contain US technology.

Under current regulations, key foreign supply chains remain beyond the reach of US authorities, fueling frustration among China hawks within the administration, and a push to expand US authority to block more shipments to Huawei.

The restrictions threatened to cut off lucrative sales for a number of American tech companies that supplied components to Huawei, including Intel, Micron and Google.

Some firms, eager to continue selling to Huawei, took advantage of a loophole that allowed them to sell products made outside the United States to Huawei without a government license, as long as the products contained less than 25 percent of certain types of sensitive American content.

The proposed measure, which applies only to Huawei, would lower that threshold to 10 percent from 25 percent. It would also expand the rule so that all types of American content would count toward that 10 percent threshold.

A Pentagon spokeswoman, Sue Gough, said the department was aware of Commerce’s proposed rule change, but “will not prematurely discuss ongoing interagency collaboration.”

A spokesman for the Commerce Department said that “if or when we have something to announce, we will do so.”

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