U.S. holds off on Huawei licenses as China halts farm purchases

Washington also slaps import duties on $4 billion of wooden cabinets

Bloomberg, AFP-JIJI

The White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei Technologies Co. after Beijing said it was halting purchases of U.S. farming goods, according to people familiar with the matter.

Commerce Secretary Wilbur Ross, whose department has vetted the applications to resume sales, said last week he has received 50 requests and that a decision on them was pending. American businesses require a special license to supply goods to Huawei after the U.S. added the Chinese telecommunications giant to a trade blacklist in May over national security concerns.

The U.S. decision rattled stocks, bonds, currencies and even soybean prices around the world. Huawei suppliers Micron Technology Inc. and Western Digital Corp. declined as much as 2.2 percent after news of the delay in license approvals.

U.S. President Donald Trump said in late June after agreeing to a now-broken trade truce with Chinese President Xi Jinping in Japan that some restrictions on Huawei would be loosened. But that promise was contingent upon China beefing up its purchases from American farmers, which Trump has complained the country has failed to do.

In the past week tensions have escalated further as Trump said he would impose a 10 percent tariff on $300 billion of Chinese imports as of Sept. 1, and his Treasury Department formally labeled China a currency manipulator.

Still, Trump said last week there were no plans to reverse the decision he made in Japan to allow more sales by U.S. suppliers of non-sensitive products to Huawei. He said the issue of Huawei is not related to the trade talks.

The White House had no immediate comment, and the Commerce Department declined to comment. Huawei also declined to comment. China’s foreign affairs and commerce ministries did not immediately respond to faxed requests for comment.

Technology companies have already made their pitch to the White House for a rapid granting of licenses that would allow them to resume some shipments of components to Huawei.

The Chinese company is one of the world’s biggest purchasers of semiconductors. Continuing access to that market is crucial to the fortunes of chipmakers such as Intel Corp., Qualcomm Inc. and Broadcom Inc., who sent their chief executives to meet with Trump in July.

Companies such as Xilinx Inc. and Micron have publicly said they have applied for licenses and called on the U.S. to allow them to resume doing business with Huawei. They argue that many of their products are easily obtainable from their overseas rivals, making a ban ineffective and also harmful to the industry that the trade dispute with China is supposed to be helping.

Meanwhile, the U.S. hit China with new import duties Thursday on more than $4 billion in imported wooden cabinets and vanities, after finding manufacturers there benefit from unfair subsidies.

The Commerce Department’s preliminary finding comes just a week after Washington announced new punitive duties on another $300 billion in Chinese goods, meaning that starting Sept. 1 all Chinese imports will be subject to punitive tariffs.

The latest announcement is one in a series of cases the department has pursued against particular product lines, usually at the request of American companies claiming to be hurt by imports from China or other trading partners.

U.S. imports of cabinets and vanities were valued at $4.4 billion last year, while subsidies ranged from 11 percent to 229.2 percent for manufacturers in China’s Jiangsu, Henan, Liaoning and Guangdong provinces, the Commerce Department said in a statement.

Based on these rates, U.S. customs agents will begin collecting duties from importers.

However, the funds would be returned if the department reverses its decision later this year or if an independent trade commission finds the subsidies did not harm U.S. industry.

The cabinet case was launched in March by a trade group called the American Kitchen Cabinet Alliance.

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