Donald Trump’s apparent ‘U-turn’ on Huawei ban explained and what happens now

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Presidents Donald Trump and Xi Jinping have hit the reset button in trade talks.

US President Donald Trump surprised many at the G20 Summit in Osaka when he relaxed his ban on American companies doing business with Huawei, which has been at the centre of his trade war with China.

Key points:

  • Donald Trump banned US companies from doing business with Huawei in May
  • His apparent partial reversal of the ban has raised the ire of his critics
  • But the “U-turn” only goes so far, and could be revoked at any time

The apparent backflip means that businesses like Google and Qualcomm can tentatively continue business as usual with Huawei, without requiring special permission from the US federal authorities.

But the White House and Commerce Department haven’t yet clarified whether the decision will affect Huawei’s use of Google’s Android operating system.

Huawei was quick to jump on the announcement, calling it a “U-turn” on its Huawei Facts Twitter account. 

But has Mr Trump really shifted his stance, what are the key players saying about it, and what’s in store next for the controversial Chinese telecom giant? 

Here’s your quick guide to the latest developments in the Huawei saga.

How did we get here?

Huawei has been a focus of the Trump administration due to ongoing concerns that its popular smartphones could be used as a “Trojan horse”.

Mr Trump initiated a ban on US companies doing business with the phone and IT hardware manufacturer on May 15, citing national security risks, which sent Huawei sales plummeting more than 40 per cent in the weeks that followed. 

Multiple governments across the world share similar concerns, with Australia banning Huawei from building its 5G networks, and Canada and the UK considering the same action.

China has railed against those moves and has taken particular issue with the US move against Huawei’s commercial operations.

Michael McFaul, a professor of political science at Stanford University, said many in Beijing believed Mr Trump was using security concerns about Huawei “to justify USG [US Government] intervention in markets to help American companies”.

“Trump’s reversal on Huawei confirms that hypothesis,” he tweeted, adding that the reversal “undermine[s] the veracity of the initial security claim”.

And William A Reinsch, an expert in international business at the Centre for Strategic and International Studies, told the ABC that quiet lobbying from Silicon Valley companies appeared to be partially behind the unexpected decision.

What’s the reaction been?

President Donald Trump shakes hands with Chinese President Xi Jinping in front of their respective national flags.

The decision to go easy on Huawei drew a mix of surprise, consternation and immediate political fire.

“Huawei is one of few potent levers we have to make China play fair on trade,” US Democrat and Senate minority leader Chuck Schumer tweeted.

“If President Trump backs off, as it appears he is doing, it will dramatically undercut our ability to change China’s unfair trades practices.”

Why is Huawei so controversial?

Why is Huawei so controversial?

The dramatic arrest in Canada of Huawei’s chief financial officer for possible extradition to the US shocked many. But what exactly is Huawei and why does it seem like it’s continually being targeted by foreign governments?

Republican senator Marco Rubio was among those from Mr Trump’s own party to speak out against the move, saying on Twitter, “we will have to get those restrictions put back in place through legislation”.

And, he claimed, Congress would pass the measures “with a large veto-proof majority”.

Asked about the developments at a daily press briefing on Monday, a spokesman for China’s Foreign Affairs ministry said during the meeting between Mr Trump and Chinese President Xi Jinping on the sidelines of the G20, the issues of “coordination, cooperation and stability” were of the utmost importance.

“It serves the interests of both sides and is the shared expectation of the international community,” the spokesman said.

“The two sides agreed to restart trade talks and the US decided not to impose additional tariffs on Chinese exports.

“This is also in the interests of both. As China has repeatedly emphasised and as the US knows clearly, a trade war or tariffs cannot solve any problem, but will only harm others and oneself.”

Did Trump really backflip on the ban? 

A woman stands in front of a shining booth showing off mobile phone technology

The ceasefire only goes so far.

Huawei is still blacklisted in the US amid concerns that the company could spy and steal trade secrets; it is already facing charges of stealing trade secrets from US companies.

Mr Reinsch added that the change isn’t as big as it may first appear.

“We do not expect Huawei to be removed from the Entities List. It appears that it simply means more export licences will be approved,” he told the ABC. 

“The Temporary General Licence that was put in place for 90 days will likely be continued and expanded to cover non-5G items.”

So what happens now?

Mr Reinsch said it’s not immediately clear how the partial lifting of the ban will play out or how significant it will be.

“It is clearly a sign that the President is willing to use an issue like this as a bargaining chip notwithstanding its national security implications,” he said.

Why Australia banned Huawei

Why Australia banned Huawei

While Australia was quick to exclude Huawei equipment from its 5G network, several major allies including the UK are not convinced that a ban is warranted.

And Huawei itself has said it is waiting on guidance from the US Department of Commerce on whether it can resume using Google’s Android mobile operating system on upcoming smartphones.

“We acknowledge President Trump’s comments related to Huawei over the weekend and will wait for guidance from the Department of Commerce but have nothing further to add at this time,” said Tim Danks, Huawei vice-president of risk management and partner relations.

But given that Mr Trump backtracked on the full force of his Huawei ban, Mr Reinsch said it was very possible that he will simply change his mind again.

“You can count on it.”