Donald Trump, U.S. President is ready to decide on extending a temporary agreement. This agreement allows Huawei to operate as a business entity in the United States. International Data Corporation, a research firm says that the American tech firms will influence the decision. The commerce department of the U.S. placed Huawei on a blacklist. The placing prevented American companies from transacting with Huawei. The restrictions on the transaction will be removed after granting a special license to Huawei. After some days, the U.S. government relieved some of the restrictions for ninety days. The Wall Street Journal and Reuters stated that the license is likely to be renewed for another ninety days. This extension will allow Huawei to transact with American companies.
Huawei’s staple product line includes servers, networking gear, telecommunications equipment, storage, and smartphones. These products require advanced technologies. The supply chain for these products is also very complex. There is no other option for Huawei other than buying advanced technologies from American companies. Donald Trump told reporters that he is going to announce the decision about Huawei tomorrow. In the G-20 summit, Trump and Xi Jinping meeting took place. At the meeting, Trump stated that the U.S. government would allow Huawei to buy products from American companies. Race for 5G supremacy dragged Huawei into the trade war between the United States and China.
At the starting of this month, Trump declared a tariff to put 10% tax added $300 billion in China imported starting from Sept. 1. These tariffs were delayed to avoid hitting of the holiday shopping period. The taxes have a direct impact, which raises import costs and average selling price of those goods. Levies may disrupt the supply chains of companies during seasonal demand. This disruption may dissatisfy the American consumer. It would be difficult to buy phones, laptops and other affected goods. Therefore, the pressure created by U.S. components suppliers will influence the extension decision.