More trouble lurks for Huawei as the US plans to choke its supply chain

The Trump administration is looking to publish a new rule that would block shipments of foreign-made goods with US tech to Huawei

The on-going battle between Huawei and the US has taken yet another twist. The Chinese tech giant which is currently banned from selling its products in the US, could be in for deeper trouble in the US, as the US government is reportedly looking to impose a rule that could block shipments of foreign-made goods to Huawei, furthering its power to squeeze the blacklisted telecommunications company in the country.

According to a Reuters report, citing two sources close to the development, the US Commerce Department has drafted a rule that lowers the earlier minimum percent of US-made components that need to be a part of any foreign product for it to fall under the US restrictions for sales and exports.

Under current regulations, a lot of key foreign supply chains remain beyond the reach of US authorities. The US currently has a De Minimis Rule which puts the minimum percent of US-made components set at 25 percent when it comes to high-tech products.

US trying to choke Huawei's supply chain?

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But as per the yet unofficial information, if the new rule drafted by the Commerce Department sets in, the said 25 percent threshold will be lowered to only 10 percent in regards to Huawei sales. This would help the US authorities to broaden their reach to include non-technical goods like consumer electronics, including non-sensitive chips, thereby expanding their authority to block more shipments to Huawei.

The new rule has reportedly sent to the Office of Management and Budget after a meeting held last week. If the new rule is signed by other government agencies, it could be issued into a final rule in a matter of weeks, with no leeway for public comment.

Rule will be more detrimental to US than Huawei

However, the rule is still not official and it's only speculative at the moment, but it looks like the US administration is bent on choking Huawei's supply chain in the US. The entire Huawei vs US government episode has been a long-running affair and it will be interesting to see what will be the ultimate outcome of this ongoing trade war between the US and one of the world's largest tech companies.

But many experts and US businesses are sceptical with regards to the government's idea of regulating supplies to Huawei to now include goods made abroad with minimal US technology, fearing that such a move would encourage Huawei to source more goods from other countries.

Huawei vs US

To recollect, the US Department of Commerce had in May 2019, placed Huawei and 40 of its related subsidiaries on a trade blacklist, alleging that the company was involved in helping China spy on the US, and cited national security concerns.

The trade blacklisting meant that the US government could restrict sales of US-made goods and a small number of foreign-made goods containing US technology to Huawei, besides also banning the sale and purchase of Huawei's tech in the country.

Related topics : Huawei