Inside Donald Trump’s blacklisting of Huawei: China hardliners prevail in battle between two White House camps

The Trump administration’s decision to put Huawei Technologies on a trade blacklist was a result of a tussle between two camps in the White House, with the hardliners prevailing as the US intensifies its battle with China over technology as well as trade.

For months, advisers led by Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer had been working toward an agreement to end the trade war. Dangling a victory that US President Donald Trump could claim, they had successfully held the president back from signing an executive order that he said would block Huawei from doing business in the US, former State Department officials and other observers said.

But in early May, the situation quickly deteriorated. Two days after negotiators concluded their “productive” talks in Beijing, the US accused China of reneging on crucial terms that it said had been agreed upon. Trump immediately escalated the conflict by imposing tariffs of up to 25 per cent on US$200 billion of Chinese goods, and threatened more.

On May 15, he signed the executive order banning US companies from using communications technology from anyone deemed a national security threat. His administration’s Commerce Department followed by adding Huawei to its “Entity List”, effectively barring the Chinese telecoms giant from the US market.

“It’s shocking to see how fast the deal fell apart,” said Paul Triolo, chief of global technology policy practice for the Eurasia Group, a risk consultancy. “The hawkish camp in the White House won out and the advisers leading the trade negotiations lost.”

The team leading the trade talks has its own differing priorities. Mnuchin wants China to pledge to buy more American agricultural and manufactured goods to shrink the US$419 billion trade deficit with China.