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The US' nuclear option against HUAWEI? Blocking it from using dollars.

The US could take even more drastic measures to sanction HUAWEI in the coming months.

Published onDecember 4, 2019

HUAWEI logo from a technology event.

In a move to further sanction Huawei during the current trade ban, the US government could be preparing to ban it entirely from the US financial system. According to Reuters, this potential plan would place it on the Treasury Department’s Specially Designated Nationals (SDN) list, making it nigh impossible for it to complete transactions in US dollars.

The US government considered doing this earlier this year but didn’t go ahead with it because if its potential implications. Now, the government could actually enact the move in the near future, depending on how things go with HUAWEI in the coming months.

Reuters reported many officials see adding HUAWEI to the SDN list as a “nuclear” option atop existing policies and should not be taken lightly. This is because the larger the entity is, the harder it is to prepare for any significant economic and diplomatic effects placing it on the list may cause, and HUAWEI would be among the largest companies ever added.

Related: The HUAWEI Mate 30 contains no US parts, but US gov’t might still not be happy

Other entities like Russia’s Rusal — the world’s second-largest aluminum company — Russian oligarchs, Iranian politicians, and Venezuelan drug traffickers are on the list as well. But HUAWEI is the world’s second-largest smartphone manufacturer, and many US allies rely on the company for their 4G networks. And since almost all of these dollar payments run through the US financial system, this move could severely cripple various other entities around the world.

In theory, the US Treasury could grant exemption licenses allowing US banks or other entities to continue making these transactions, but that defeats the purpose of such a drastic political move. The US government wouldn’t want to minimize the effect of adding HUAWEI to the SDN list. If it moves forward with this plan, it looks like the government is going to be all in.

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