Business Monday

Watch for pragmatism over protectionism in trade dispute: Opinion

Last week’s high-level trade talks between the U.S. and China ended 40 minutes early, and with little public acknowledgment of progress. Both the White House and the Beijing government described the negotiations as “constructive.” The two sides will meet again in September.

A day later came the presidential tweet announcing a “small additional Tariff [sic] of 10 percent” on more Chinese imports. President Trump framed the new tax as payback for the Chinese not following through on their pledge to restart purchases of American agricultural products.

Thousands of miles away from the bargaining table, Secretary of Commerce Wilbur Ross may have provided a different bargaining chip. Traveling in Brazil, Ross told Reuters a decision on whether or not to allow American technology companies to sell their gear to a controversial Chinese telecommunications firm is “forthcoming.” That decision could happen as soon as the week ahead.

In May, the Trump Administration added Huawei to the government’s entity list. That list includes companies the U.S. government believes “pose a significant risk” to national security. Huawei was blacklisted over worries about its close relations with the Chinese government and concerns its communications equipment could be used to spy on foreign governments and companies.

In response, China has threatened to create it’s own list of companies banned from doing business in China. It is not clear what American firms may be on the Chinese list, but FedEx has attracted attention over delays in delivering shipments to Huawei. FedEx has blamed an “operational error.”

Huawei is not a household name in the U.S. or for American investors. However, it is the largest telecommunications supplier and the second-largest mobile phone maker in the world. That scale means sales revenue for American semiconductor companies like Broadcom, Qualcomm and Micron. Stocks of those three lost more than 10 percent each in the days after Huawei was blacklisted.

Granting these companies special licenses to resume business with Huawei wouldn’t necessarily be a breakthrough in the cold war over trade with China. However, it could be an indication of the administration’s practicality as the trade tensions make economic growth increasingly vulnerable.

Tom Hudson hosts “The Sunshine Economy” on WLRN-FM, where he is vice president of news. Twitter@HudsonsView.
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