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U.S. Government to Ban More sales to Huawei, Squeezing Blacklisted Company’s Operations

The U.S. government is nearing publication of a rule that would vastly increase its powers to block deliveries of foreign-made items to China’s Huawei, as it seeks to contract the blacklisted telecoms company, two sources said.

The U.S. Commerce Division in May positioned Huawei Technologies on a trade blacklist, citing national safety concerns.

That allowed the U.S. authorities to restrict sales of U.S.-made items to the company and a small variety of objects made overseas that contain U.S. technology.

Under current rules, crucial international supply chains stay past the reach of U.S. authorities, fueling frustration among China hawks within the administration and a push to expand U.S. authority to dam more deliveries to Huawei.

However, U.S. companies say an effort to enable the federal government to regulate more sales to Huawei to include low-tech objects made overseas with little U.S. technology might end up needlessly damaging U.S. corporations while encouraging Huawei to source more items overseas.

In November, Commerce was considering broadening the De minimis Rule, which records how much U.S. content in an overseas-made product gives the U.S. authorities power to regulate an export.

Under current rules, the U.S. can require a license or block the export of many high-tech products shipped to China from different nations if U.S.-made parts make up over 25% of the value.

Based on two sources acquainted with the subject, Commerce has drafted a rule that would lower the edge on exports to Huawei to 10% and increase the purview to incorporate non-technical items like consumer electronics.

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