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Trump Hits Huawei In the Mouth: How Can That Hit You In the Pocket?

Trump Hits Huawei In the Mouth: How Can That Hit You In the Pocket?

Last week, as trade tensions continued to rise between China and the US, the Trump administration landed one of the heaviest blows yet on Beijing, moving to severely restrict the Chinese tech and telecoms giant Huawei's ability to do business with American firms.

What happened? Two things: The Trump administration formally banned sales of Huawei telecoms equipment in the US. More importantly, it also prohibited American firms from selling their technology to Huawei without a special license.

Why? It's complicated. Technically, Huawei was blacklisted from acquiring US technology due to alleged violations of US sanctions against Iran. But the US is also concerned that Huawei could allow Beijing to spy on or disrupt data flowing across the next-generation 5G data networks of the US or its allies. President Trump may also believe the moves will give him extra leverage in his broader fight with Beijing over trade and technology.

The fallout is already starting to hit. Here's where:


Your pocket: Check your phone, because if you're one of the 200 million people worldwide who bought a Huawei handset last year, you may have stopped receiving software updates over the weekend from Google, whose Android mobile operating system powers Huawei's smartphones.

The US yesterday issued a temporary license that will allow software updates to "existing" handsets for 90 days – but that's not long. As other US tech companies distance themselves from Huawei, and the company is forced to find new suppliers, the cost of cellphones and other telecoms equipment will rise, both for consumers and companies.

US-China relations: This is potentially a huge blow to China. Huawei is a world leader in 5G technology, the next generation of mobile networks needed to run driverless cars and smart cities. But the company still relies on US-built chips and software, so losing access to American suppliers is a big deal.

If Huawei can't negotiate its way out of Trump's new measures, Beijing could retaliate by messing with US tech companies like Apple that do huge business in China, or by attempting to restrict US firms' access to China's massive supply of rare earths metals which are essential to powering many smartphones and other high-tech gadgets.

The structure of the global economy: Over the past 30 years, the globalization of supply chains – that is, firms sourcing parts and labor from the countries that can supply those things most efficiently – has generally been seen as a good thing. It reduced the cost of goods for Western consumers, gave developing countries a leg up, and created economic interdependencies thought to minimize the chance of war.

But forbidding the largest US tech firms from doing business with the largest Chinese ones is a direct rejection of that idea. As this astute Twitter thread points out, this is new and uncharted territory.

The upshot: The US and China still have time to find a solution, but the risk of a geopolitical break with major consequences for your wallet, for US-China relations, and even for the global economy is rising. Fast.

Wales, early 19th century: During breaks from his law studies, William Robert Grove indulges in his passion for science to become an inventor. On his honeymoon in Europe, he learns about the new energy source everyone's talking about: electricity. After learning that electricity allows water to be broken down into its two components, hydrogen and oxygen, his intuition leads him to an idea that ends up making him a pioneer of sustainable energy production.

Watch the story of William Robert Grove in Eni's MINDS series, where we travel through time seeking scientists.

Ian Bremmer's Quick Take:

Hi, everybody. Ian Bremmer here, and as we head into the weekend, a Quick Take on, well, the first bombing campaign of the new Biden administration. You kind of knew it was going to happen. Against some Iranian-backed militias in Syria, looks like a couple of dozen, perhaps more killed, and some militia-connected military facilities destroyed. I think there are a few ways to look at this, maybe three different lenses.

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But… could China succeed where other outsiders have failed – and without a costly and risky military presence? Is the promise of lucrative trade and investment enough to ensure a power-sharing deal among Afghanistan's warring factions?

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Carl Bildt, former Prime Minister and Foreign Minister of Sweden, shares his perspective from Stockholm on Europe In 60 Seconds:

Is there a military coup ongoing in Armenia?

Well, it isn't a military coup as of yet, but it's not far from it either. This is the turmoil that is resulting from the war with Azerbaijan, which Armenia took a large death loss. What happened was that the head of the armed forces asked for the prime minister to resign. That was not quite a coup, but not very far from it. Now, the prime minister sacked the head of the armed forces, there's considerable uncertainty. Watch the space.

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In the fall of 2019, weeks before the COVID-19 pandemic would change the world, Ian Bremmer asked Dr. Fauci what kept him up at night and he described a "a pandemic-like respiratory infection." Fast-forward to late February 2021 and Dr. Fauci tells Ian, "I think we are living through much of that worst nightmare." Dr. Fauci returns to GZERO World to take stock of the nightmare year and to paint a picture of what the end of the pandemic could look like—and when it could finally arrive.

Catch the full episode of GZERO World, where Dr. Fauci discusses the latest in vaccine roll out, schools re-openings, and plenty more, on US public television stations nationwide, beginning Friday, February 26. Check local listings.

The GZERO World Podcast with Ian Bremmer. Listen now.

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