President Donald Trump has barred American companies from using foreign-made telecom equipment posing a national security threat, a move aimed at banning Chinese giant Huawei from US networks. The US and China are locked in a trade battle that has seen mounting tariffs, sparking fears the conflict will damage the global economy. 

President Trump signed an executive order on May 15 which did not directly name any country or company, but officials have previously named Huawei a “threat” and asked allies not to buy equipment for the next-generation 5G networks from the world’s largest provider of telecommunications.

The order declared a national economic emergency that empowers the government to ban the technology and services of “foreign adversaries” deemed to pose “unacceptable risks” to national security — including from cyber espionage and sabotage.

China slammed the decision and said it will take steps to protect its companies, in a further test of ties as the superpowers clash over trade. China strongly opposes other countries imposing unilateral sanctions on Chinese entities, a Commerce Ministry spokesman said, stressing that the United States should avoid further impacting Sino-US trade relations.

Under the order that will take effect in the coming days, Huawei will need a US government license to buy American technology.

Huawei has said its work does not pose any threats and says it is independent from the Chinese government. “Restricting Huawei from doing business in the US will not make the US more secure or stronger,” the company said in a statement, responding to the decision.

Soon after the executive order — “Securing the Information and Communications Technology and Services Supply Chain” — was signed, the Bureau of Industry and Security (BIS) of the Department of Commerce announced that it will be adding Huawei Technologies Co. Ltd and its affiliates to its Entity List.

The Department of Commerce alleged that Huawei was engaged in activities that are contrary to US national security or foreign policy interest. As a result, sale or transfer of American technology to a company or person on the Entity List requires a license issued by the BIS, and a license may be denied if the sale or transfer would harm US national security or foreign policy interests.

The listing will be effective when published in the Federal Register.

Regulations issued by the Department of Commerce in the coming days will detail how determinations will be made on whether a transaction meets the criteria listed in the executive order, the official said.

Cutting across party lines, US lawmakers praised the Trump administration’s announcement.