US President Donald Trump is planning to issue an executive order to ban US telecom companies from using equipment made by China's Huawei Technologies and ZTE.
The president would issue the order declaring a national emergency as early as in January, Reuters reported. The International Emergency Economic Powers Act gives the president the authority to regulate commerce in times of a national emergency.
The move has long been on the anvil and would worsen the trade and economic stand-off between two of the world's largest economies.
'Beijing's Backdoor Spying Channels'
The US has long harboured the grouse that the telecom giants are tightly controlled by Chinese government and their equipment would be used as backdoor spying channels by Beijing. Both Huawei and ZTE have denied all allegations.
Though the presidential order would not name Huawei and ZTE, it would bear heavily on the commerce department, practically snuffing out the spread of equipment made by the Chinese companies, the agency reported citing three sources familiar with the situation.
The key order would make it difficult for smaller US telecom players who have been prepping for the transition to the next generation 5G wireless networks. The ban on Chinese equipment would also entail millions of dollars in transition costs for the telecom players who have been using the Chinese equipment.
Earlier in August, President Trump had signed an order banning Huawei and ZTE tech from use by the US government and government contractors.
The two Chinese firms have been looked at with suspicion in the US for years. Huawei and ZTE were cited as national security threat by a 2012 report by the US Congress.
Huawei is the world's largest supplier of telecommunications gear and the world's second-biggest smartphone maker. Many other US allies, including Australia, Britain and New Zealand have made it clear that Huawei tech would not be used by the government organisation and it agencies.
Asian ally Japan also banned Huawei and ZTE from government contracts this month.