Wed, 01 Apr 2020

President Donald Trump objected on Tuesday to U.S. proposals that would prevent companies from supplying jet engines and other components to China's aviation industry and suggested he had instructed his administration not to implement them.

In a series of tweets and in comments to reporters Tuesday, Trump said national security concerns, which had been cited as reasoning for the plans, should not be used as an excuse to make it difficult for foreign countries to buy U.S. products.

The president's comments came after weekend reports by Reuters and other news media that the government was considering whether to stop General Electric Co from further supplying engines for a new Chinese passenger jet.

The president's intervention illustrated that, at least in this case, he would prioritize economic benefits over potential competitive pitfalls and national security concerns.

His views on the issue contrasted with the sharp restrictions his administration has placed on U.S. companies trading with Huawei Technologies, the world's largest telecommunications equipment maker, also for national security reasons.

"We're not going to be sacrificing our companies ... by using a fake term of national security. It's got to be real national security. And I think people were getting carried away with it," Trump told reporters at Joint Base Andrews before departing for a trip to California.

"I want our companies to be allowed to do business. I mean, things are put on my desk that have nothing to do with national security, including with chipmakers and various others. So we're going to give it up, and what will happen? They'll make those chips in a different country or they'll make them in China or someplace else," he said.

The United States has supported American companies' business with China's aviation sector for years.

"I want China to buy our jet engines, the best in the World," Trump wrote on Twitter. "I want to make it EASY to do business with the United States, not difficult. Everyone in my Administration is being so instructed, with no excuses..."

Trade lawyer Doug Jacobson said limitations on jet engines and chip makers would hurt U.S. companies.

"This is ultimately akin to cutting off your nose to spite your face because ultimately you're hurting U.S. manufacturing companies but you're not having a material impact on your target," he said.

U.S.-China trade

The United States and China, the world's two largest economies, have a complicated and competitive relationship.

Trump signed a first-phase trade deal with China earlier this year after a long trade war in which the countries levied significant tariffs on each others' products, many of which remain in place.

Washington is also eyeing limits on other components for Chinese commercial aircraft such as flight control systems made by Honeywell International Inc.

Central to the possible crackdown is whether shipments of U.S. parts to China's aircraft industry could fuel the rise of a serious competitor to U.S.-based Boeing Co or boost China's military capabilities.

The Semiconductor Industry Association (SIA) said it welcomed Trump's comments.

"We applaud President Trump's tweets supporting U.S. companies being able to sell products to China and opposing proposed regulations that would unduly curtail that ability," John Neuffer, the group's president, said in a statement. "As we have discussed with the administration, sales of non-sensitive, commercial products to China drive semiconductor research and innovation, which is critical to America's economic strength and national security."

Huawei

Huawei is at the heart of a battle for global technological dominance between the United States and China. Washington placed Huawei on a blacklist in May last year, citing national security concerns. The United States has also been trying to persuade allies to exclude its gear from next generation 5G networks on grounds its equipment could be used by China for spying. Huawei has repeatedly denied the claim.

"So, national security is very important. I've been very tough on Huawei, but that doesn't mean we have to be tough on everybody that does something," Trump said.

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