Huawei and ZTE have been designated as national security threats by the FCC

Huawei and ZTE have now been designated as national security threats by the FCC in a move that will be perceived as an escalation in the trade conflicts between the U.S. and China. This designation bars all U.S. telecoms providers from using the FCC's Universal Service Fund to spend on any equipment purchased from either company, whether it relates to procurement or repairs.

In a statement, FCC Chairman Ajit Pai said:

With today's Orders, and based on the overwhelming weight of evidence, the Bureau has designated Huawei and ZTE as national security risks to America's communications networks—and to our 5G future. Both companies have close ties to the Chinese Communist Party and China's military apparatus, and both companies are broadly subject to Chinese law obligating them to cooperate with the country's intelligence services.

The Bureau also took into account the findings and actions of Congress, the Executive Branch, the intelligence community, our allies, and communications service providers in other countries. We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure. Today's action will also protect the FCC's Universal Service Fund—money that comes from fees paid by American consumers and businesses on their phone bill from being used to underwrite these suppliers, which threaten our national security.

Both ZTE and Huawei have been targets of the U.S. over the past few years. Huawei especially has seen trade bars decimate its smartphone business, once willing partners begin to back away on 5G, and the development of a fog of criminality over the company.

Both Huawei and ZTE have maintained their innocence throughout.

An international trade lawyer explains just how far reaching the Huawei ban really is