Huawei has a reputation as the telecom giant around the world. The company is among the earliest players that entered the 5G era and it has been working to develop its own 5G technology since 2009. Despite being the telecom giant, Huawei relies heavily on US suppliers for tech components. This has given Trump's administration the authority to exploit the situation.

Following the desperation to contain China that also led to the arrest of Huawei's CFO Meng Wanzhou, on Wednesday, May 15, President Trump signed an executive order to effectively ban Huawei along with 70 affiliates from buying tech equipment from US suppliers without the permission of Washington.

In response to the news, the tech stock-market dropped dramatically.

What's the reason behind banning Huawei in the US?

A White House press release explains that the order doesn't list any foreign company's name. Rather, it gives the Commerce Secretary the authority to ban the supplies of the companies that have allegedly close ties with foreign Governments. However, the Commerce Department clearly said it believes that Huawei is engaged in activities that are against US national security and interests of its foreign policy.

Although Trump has based this decision on national security, this order came right after the collapse of talks between China and the US to end the trade war.

What's the reason behind the fall of tech shares?

America has been lobbying to convince its western allies to restrict the use of Huawei equipment in their 5G deployment. Following Washington's decision to restrict Huawei in the US, stocks of affiliates slipped very quickly on Wednesday.

Chunxing Precision Mechanical which is a key partner of Huawei witnessed the drop of its shares by 5.37 percent.

Tatfook Technology which sells Huawei and to Ericsson experienced 2.84 percent drop in its shares this morning. New Sea Union Telecom, a supplier to China's 'big three' slid 4.88 percent.

What does Huawei say about this ban?

As reported by TechCrunch, Huawei agreed to talk to Washington about recent developments. They said we are "Willing to talk to the US and ready to come up with effective measures to ensure product security."

Sharing its views with TechCrunch, Huawei warned that this move by the US Government will raise serious legal issues.

They said, "These unreasonable restrictions will infringe upon our legal rights".

Some of the US allies like the UK are still investigating the possible security threat that Huawei could pose to western countries. However, to tackle this concern, Huawei has come up with a very bold step. On Tuesday, Huawei told reporters it is ready to sign a no-spy deal with western countries including the US, to make its equipment meet no-spy and no-backdoor standards.
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