The UK walks a fine line on Huawei, is Germany next?

For months now, the US has been lobbying countries around the world to ban the Chinese tech giant Huawei from building the 5G data networks that are going to power everything from your cell phone, to power grids, to self-driving cars. US security hawks say allowing a Chinese company to supply such essential infrastructure could allow the Chinese government to steal sensitive data or even sabotage networks. On the other hand, rejecting Huawei could make 5G more expensive. It also means angering the world's second-largest economy.

On Tuesday, the UK government dealt a blow to the US campaign by announcing that, after careful consideration, it would let Huawei in, subject to some restrictions. It's a big decision that could have ripple effects - not just on the UK's relationship with the US and China, but on other major economies, like Germany, that are trying to navigate US-China trade and technology tensions.

Here's what's going on:

In the UK, Prime Minister Boris Johnson is seeking the middle ground. The US has banned Huawei from its own 5G networks and threatened to suspend intelligence-sharing with other allies who don't follow suit. But national security isn't Johnson's only concern. For one thing, there's the UK's trade relationship with China: banning Huawei would anger Beijing's government right as London is trying to forge critical post-Brexit ties. At the same time, he's on the hook for campaign promises to connect under-served regions of the UK to super-fast broadband, which will be harder to do if UK telecom companies can't use cheaper Huawei gear.

So, the UK's response is an attempted compromise: Huawei will be labelled a "high-risk" vendor and will face restrictions on where and how much of its equipment can be used. Johnson will hope the US is bluffing when it comes to cutting off one of the most important intel-sharing relationships in the world.

In Germany, Angela Merkel is watching anxiously. The German chancellor's political dilemma is sharper than Johnson's. On one side, German lawmakers, including influential members of Merkel's CDU party, want tougher restrictions that would effectively ban Huawei. But Germany's politically powerful carmakers do huge business in China, which could leave Germany more vulnerable to retaliation if it excludes the Chinese company. Merkel herself favors more openness, but unlike Johnson, who has a strong, fresh mandate, Merkel is in the twilight of her tenure, with a governing coalition under serious strain. The UK's decision to allow Huawei in may bolster Merkel's case, but she'll want to wait and see whether EU member state leaders take a similar position at a summit in March before she presses the issue with recalcitrant lawmakers.