Huawei CFO arrest in Canada could affect iPhone tariffs if US-China trade talks sour

Posted:
in General Discussion edited December 6
Huawei's CFO -- and founder's daughter -- Meng Wanzhou was arrested in Canada on Saturday and faces extradition to the United States. The move against one of Apple's biggest international smartphone competitors threatens to open a new front in a looming trade war between the US and China.




Meng, Huawei CFO and deputy chair, was apprehended by Canadian police in Vancouver while transferring between flights on December 1. The executive, one of four who rotate in the position of vice chair, is also the daughter of ex-Chinese army officer and founder Ren Zhengfei, and is thought to be a candidate to take over the company in the future.

It is unclear why the arrest was made, as no details have been provided by Canada's government on the matter. The only real information provided so far is that she was arrested and is being held by the country, with Canada's justice department advising a court hearing has been set for Friday, reports The Guardian.

The lack of information on the arrest is unusual, with the justice department claiming "As there is a publication ban in effect, we cannot provide any further detail at this time." Notably, the statement adds "The ban was sought by Ms. Meng," rather than by a government agency or Huawei itself.

It is believed the arrest relates to U.S. sanctions violations, according to sources of Reuters. Authorities in the United States said to have investigated the company since 2016 over shipping products of U.S. origin to Iran and other countries that are subject to sanctions.

Friday's court hearing could lead to Meng being extradited to the United States over the matter, if it does relate to sanctions violations.

The Chinese government has demanded more information from both the Canadian and U.S. Governments about the arrest, as well as for an immediate release of Meng. Chinese consular assistance has been provided to Meng since her arrest.

Sanctions consequences

Huawei Competitor ZTE found itself in financial hot water when the Trump administration issued a total ban for breaking embargo restrictions on Iran. This cost the company dearly, with a $892 million penalty for breaking sanctions, and a billion-dollar loss of business above and beyond that fine since the ban.

"We are putting the world on notice: the games are over," Commerce Secretary Wilbur Ross said in a statement in March 2017 when a governmental ban on ZTE was put into place. "Those who flout our economic sanctions and export control laws will not go unpunished -- they will suffer the harshest of consequences. Under President Trump's leadership, we will be aggressively enforcing strong trade policies with the dual purpose of protecting American national security and protecting American workers."

ZTE's and Huawei's technologies were used across a wide range of enterprise and defense applications before a ban was put into place by the US and several European countries. Despite the ban, Huawei remains one of the world's largest suppliers of telecommunications and networking hardware in the world, with a burgeoning Android smartphone business directly competing with Apple in many markets.

At present, Huawei is only restricted from governmental contracts. An escalation of that ban could prevent other companies in the US from selling other critical components to Huawei -- and prevent Google from providing Android to the company.

China's Huawei has already produced its own Kirin smartphone chip, so in that regard, it is not beholden to U.S. interests. The company is still reportedly working on an internal OS to similarly avoid "the crutch of Android" as it calls it -- but it is not clear how far along that development is, after the effort starting in 2012.

Should the administration choose, it could also apply a total import ban on the company, preventing U.S. consumers from purchasing Huawei's smartphones and other products.

Fixing relations

The arrest may affect more than Huawei's standing with the U.S. government, as it could negatively impact the current political climate between the U.S. and China. The two are currently in a trade war, with the Trump administration threatening to apply tariffs on $200 billion of goods from China, although the two companies are in talks to try and de-escalate the situation.

Trump and Chinese President Xi Jinping recently held talks on the matter, with a 90-day truce on trade embargo expansions announced by the President on the same day as Meng's arrest -- but the facts of the matter are under some dispute by the Chinese government. The potential extradition of Meng to the United States and prosecution may add more pressure to the talks, and could cause China to withdraw.

If the discussions break down, President Donald Trump has already signaled an intention to apply more tariffs onto all other imports. While previously tariffs did not impact the iPhone, it is highly likely Apple's products imported from the country will be hit by the extra fees.

It is thought the iPhone could be hit by a 10-percent tax if the extra tariffs are applied, with Apple either having to consume the cost or pass it on to consumers. Analysts estimate this could raise the cost of an iPhone XS Max by between $60 and $160, if passed on to customers.
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Comments

  • Reply 1 of 33
    Something I don't understand. The US may be pissed with the company for violating the US law. They have the right to block export to the company, and the import and sale of the companies products into the US. To even lay fines on the company and seize its assets in the US.
    But how can they look at criminally charging a Chinese citizen who works for a Chinese company that is doing business in China?
    Does this mean that Saudi Arabia could demand my extradition for violating their Apostasy laws?
    Could Russia demand my extradition for slandering Putin and his criminal regime?
    The US has a beef with the company, but why would they have any jurisdiction for criminal charges?
    edited December 6 Joe Arredondocornchipn2itivguyradarthekatbadmonk
  • Reply 2 of 33
    I really hope this turns out to not have anything to do with the U.S. sanctions violations. But I'd be surprised if that hope is realized.

    This could cause significant problems.
    badmonk
  • Reply 3 of 33
    tmaytmay Posts: 3,245member
    DAalseth said:
    Something I don't understand. The US may be pissed with the company for violating the US law. They have the right to block export to the company, and the import and sale of the companies products into the US. To even lay fines on the company and seize its assets in the US.
    But how can they look at criminally charging a Chinese citizen who works for a Chinese company that is doing business in China?
    Does this mean that Saudi Arabia could demand my extradition for violating their Apostasy laws?
    Could Russia demand my extradition for slandering Putin and his criminal regime?
    The US has a beef with the company, but why would they have any jurisdiction for criminal charges?
    Resale of U.S. technology into Iran, technology that is banned by U.S. Law, is the claim.
    sdw2001racerhomie3cornchipcmd-zn2itivguyravnorodomwatto_cobra
  • Reply 4 of 33
    avon b7avon b7 Posts: 2,895member
    This is definitely a contender for hot potato of the year award.  
  • Reply 5 of 33
    DAalseth said:
    Something I don't understand. The US may be pissed with the company for violating the US law. They have the right to block export to the company, and the import and sale of the companies products into the US. To even lay fines on the company and seize its assets in the US.
    But how can they look at criminally charging a Chinese citizen who works for a Chinese company that is doing business in China?
    Does this mean that Saudi Arabia could demand my extradition for violating their Apostasy laws?
    Could Russia demand my extradition for slandering Putin and his criminal regime?
    The US has a beef with the company, but why would they have any jurisdiction for criminal charges?
    Yes, they could, but the US would not be supporting/complying with that decision. Canada, on the other hand, is in agreement with the US on trade wars. In short - Very poorly thought out example that you made here. If you are a Chinese national that breaks US laws by selling illegal products in the US, my advice to you would be - DO NOT GO to the countries where extradiction laws could create legal problems for you. Just the same way - do not fly via Saudi airports, if you break Saudi laws...  
    edited December 6
  • Reply 6 of 33
    Mike WuertheleMike Wuerthele Posts: 3,719administrator
    avon b7 said:
    This is definitely a contender for hot potato of the year award.  
    Yeah, we agree. It'll be interesting to see how much of this is public-facing in the next week or so.
    muthuk_vanalingam
  • Reply 7 of 33
    DAalseth said:
    Something I don't understand. The US may be pissed with the company for violating the US law. They have the right to block export to the company, and the import and sale of the companies products into the US. To even lay fines on the company and seize its assets in the US.
    But how can they look at criminally charging a Chinese citizen who works for a Chinese company that is doing business in China?
    Does this mean that Saudi Arabia could demand my extradition for violating their Apostasy laws?
    Could Russia demand my extradition for slandering Putin and his criminal regime?
    The US has a beef with the company, but why would they have any jurisdiction for criminal charges?
    Yeah, it's pretty arrogant for the U.S. to presume to have criminal authority over actions taken outside U.S. jurisdiction. It wouldn't be the first time we've done that of course, and we wouldn't be the only nation to do it. Still, if this turns out to be the reason she was arrested, then we're asking for trouble.
  • Reply 8 of 33
    tzeshantzeshan Posts: 1,795member
    DAalseth said:
    Something I don't understand. The US may be pissed with the company for violating the US law. They have the right to block export to the company, and the import and sale of the companies products into the US. To even lay fines on the company and seize its assets in the US.
    But how can they look at criminally charging a Chinese citizen who works for a Chinese company that is doing business in China?
    Does this mean that Saudi Arabia could demand my extradition for violating their Apostasy laws?
    Could Russia demand my extradition for slandering Putin and his criminal regime?
    The US has a beef with the company, but why would they have any jurisdiction for criminal charges?
    Yes, they could, but the US would not be supporting/complying with that decision. Canada, on the other hand, is in agreement with the US on trade wars. In short - Very poorly thought out example that you made here. If you are a Chinese national that breaks US laws by selling illegal products in the US, my advice to you would be - DO NOT GO to the countries where extradiction laws could create legal problems for you. Just the same way - do not fly via Saudi airports, if you break Saudi laws...  
    Your example is not challenging. I have a better one if you can tolerate. China banned sales of weapons to Taiwan because Taiwan is a province of China. Can China arrest US weapon producer employees for selling weapons to Taiwan? 
  • Reply 9 of 33
    tzeshantzeshan Posts: 1,795member
    I have another good example. Recently the State Department announced the sanction of a Chinese general for buying Russia S400 missiles. Yet India bought S400 from Russia too. 
  • Reply 10 of 33
    tzeshantzeshan Posts: 1,795member
    Is there any good rational in these two examples? 
  • Reply 11 of 33
    Je peux dire:
    Quelque a choisi que je ne comprends pas. Les États-Unis peuvent être furieux contre l'entreprise pour avoir enfreint la loi américaine. Ils ont le droit de bloquer les exportations vers l'entreprise, ainsi que la vente de leurs produits aux États-Unis. Même imposer des modifications à l'entreprise et saisir ses droits aux États-Unis.  
    Comment peuvent-ils envisager d'inculper criminaliser un citoyen chinois qui travaille pour une société chinoise qui fait des affaires en Chine?
    Cela signifie-il que l'Arabie saoudite pourrait demander mon extradition pour violation des lois sur l'apostasie?
    La Russie pourrait-elle exiger mon extradition pour avoir diffamé?  

    Les États-Unis ont des liens avec la société, mais pourquoi voudrait-ils une juridiction pour les accusations criminelles?
    La technologie de l'Iran en Iran, Technologie interdite par la loi américaine, est la prétention. 



    Meng, directeur financier et vice-président de Huawei, a été approuvé par la police canadienne à Vancouver alors qu'il effectuait une correspondance entre les vols le 1er décembre. L'exécutif, l'un des quatre vice-président par rotation, est également la fille d'un ancien officier de l'armée chinoise et fondateur. Ren Zhengfei. 

    La raison de cette arrestation n'est pas claire car aucun détail n'a été fourni par le gouvernement canadien à ce sujet. https://downloader.vip/torrent-sites/  https://downloader.vip/turbotax/ 
    https://downloader.vip/gogoanime/
     
    edited December 6 fallenjt
  • Reply 12 of 33
    One side note. Chinese officials said US and canada violated Meng’s human Right.  

    The irony is strong . 
    tmaycornchipmuthuk_vanalingamwatto_cobra
  • Reply 13 of 33
    tzeshantzeshan Posts: 1,795member
    US and Canada have extradition treaties. Canada has to detain Meng under US request without the need for evidence. Whether Canada will extradite her is up to Canadian government 
  • Reply 14 of 33
    tzeshan said:
    DAalseth said:
    Something I don't understand. The US may be pissed with the company for violating the US law. They have the right to block export to the company, and the import and sale of the companies products into the US. To even lay fines on the company and seize its assets in the US.
    But how can they look at criminally charging a Chinese citizen who works for a Chinese company that is doing business in China?
    Does this mean that Saudi Arabia could demand my extradition for violating their Apostasy laws?
    Could Russia demand my extradition for slandering Putin and his criminal regime?
    The US has a beef with the company, but why would they have any jurisdiction for criminal charges?
    Yes, they could, but the US would not be supporting/complying with that decision. Canada, on the other hand, is in agreement with the US on trade wars. In short - Very poorly thought out example that you made here. If you are a Chinese national that breaks US laws by selling illegal products in the US, my advice to you would be - DO NOT GO to the countries where extradiction laws could create legal problems for you. Just the same way - do not fly via Saudi airports, if you break Saudi laws...  
    Your example is not challenging. I have a better one if you can tolerate. China banned sales of weapons to Taiwan because Taiwan is a province of China. Can China arrest US weapon producer employees for selling weapons to Taiwan? 
    Can they? Yes. Should they? No. They could ban the company and possibly the arms company from doing business with China. They could pressure allied countries to join in the boycott. They could even put in a travel ban for the people involved. But to arrest a non citizen for actions taken outside their country seems unethical to me.<br>
    How would the US react if China requested the arrest of the head of General Dynamics or Boeing as they passed through a third country, basing it on the fact that their products had been sold to Taiwan?
    edited December 6 cornchiptokyojimumuthuk_vanalingam
  • Reply 15 of 33
    Huawei has just been banned in New Zealand from supplying equipment for the impending 5G rollout.
    Supposedly over “security concerns”, but critics are saying that it’s really just to support the American ban.
  • Reply 16 of 33
    tzeshan said:
    Yes, they could, but the US would not be supporting/complying with that decision. Canada, on the other hand, is in agreement with the US on trade wars. In short - Very poorly thought out example that you made here. If you are a Chinese national that breaks US laws by selling illegal products in the US, my advice to you would be - DO NOT GO to the countries where extradiction laws could create legal problems for you. Just the same way - do not fly via Saudi airports, if you break Saudi laws...  
    Your example is not challenging. I have a better one if you can tolerate. China banned sales of weapons to Taiwan because Taiwan is a province of China. Can China arrest US weapon producer employees for selling weapons to Taiwan? 
    Not an apples to apples comparison.  If a US company sold chinese weaponry to Taiwan against Chinese laws, you can bet they would be arrested if they travelled through a country which had an extradition treaty with China.

    In the past, US and China typically avoided arresting each others citizens due to the threat of political revenge, but it seems the trade war has reached a new phase.
  • Reply 17 of 33
    DAalseth said:
    Something I don't understand. The US may be pissed with the company for violating the US law. They have the right to block export to the company, and the import and sale of the companies products into the US. To even lay fines on the company and seize its assets in the US.
    But how can they look at criminally charging a Chinese citizen who works for a Chinese company that is doing business in China?
    Does this mean that Saudi Arabia could demand my extradition for violating their Apostasy laws?
    Could Russia demand my extradition for slandering Putin and his criminal regime?
    The US has a beef with the company, but why would they have any jurisdiction for criminal charges?
    And yet Justin Trudeau has been working with China to get an extradition treaty with them. Go figure.

    https://www.theglobeandmail.com/news/politics/justin-trudeau-defends-extradition-treaty-talks-with-china/article31997509/
  • Reply 18 of 33
    sdw2001 said:
    The arrest may affect more than Huawei's standing with the U.S. government, as it could negatively impact the current political climate between the U.S. and China. The two are currently in a trade war, with the Trump administration threatening to apply tariffs on $200 billion of goods from China, although the two companies are in talks to try and de-escalate the situation. 

    This is fake news and a poorly written paragraph.  The two countries (not companies) are, in fact, trying to deescalate the situation.  But it's not a trade war.  Anyone saying that is just being sensational, or doesn't understand what he/she is talking about.  

    As for this issue, let's not pretend it's happening on its own.  This is the President doing what he does.  This is a negotiation.  He's applying pressure, then offering ways out.  I don't mean this in any political way....it is just an observation of how he does business.  He did the same thing with Saudis, where he duped them into reducing oil prices.  
    Agree. Taking on complex, longstanding and unresolved trade issues with a tough stance is just good negotiating. There is no “trade war”.
    edited December 6
  • Reply 19 of 33
    sdw2001 said:
    The arrest may affect more than Huawei's standing with the U.S. government, as it could negatively impact the current political climate between the U.S. and China. The two are currently in a trade war, with the Trump administration threatening to apply tariffs on $200 billion of goods from China, although the two companies are in talks to try and de-escalate the situation. 

    This is fake news and a poorly written paragraph.  The two countries (not companies) are, in fact, trying to deescalate the situation.  But it's not a trade war.  Anyone saying that is just being sensational, or doesn't understand what he/she is talking about.  

    As for this issue, let's not pretend it's happening on its own.  This is the President doing what he does.  This is a negotiation.  He's applying pressure, then offering ways out.  I don't mean this in any political way....it is just an observation of how he does business.  He did the same thing with Saudis, where he duped them into reducing oil prices.  
    What defines what is and is not a trade war?
  • Reply 20 of 33
    sdw2001sdw2001 Posts: 16,907member
    sdw2001 said:
    The arrest may affect more than Huawei's standing with the U.S. government, as it could negatively impact the current political climate between the U.S. and China. The two are currently in a trade war, with the Trump administration threatening to apply tariffs on $200 billion of goods from China, although the two companies are in talks to try and de-escalate the situation. 

    This is fake news and a poorly written paragraph.  The two countries (not companies) are, in fact, trying to deescalate the situation.  But it's not a trade war.  Anyone saying that is just being sensational, or doesn't understand what he/she is talking about.  

    As for this issue, let's not pretend it's happening on its own.  This is the President doing what he does.  This is a negotiation.  He's applying pressure, then offering ways out.  I don't mean this in any political way....it is just an observation of how he does business.  He did the same thing with Saudis, where he duped them into reducing oil prices.  
    What defines what is and is not a trade war?

    That's fair question.  I don't have any special authority or expertise.  It's just a common sense assessment based on total trade between the countries and our deep economic ties.  We total nearly $700b in total trade between us.  The tariffs that have been imposed don't cover the lion's share of the $500 billion or so we import from China.  They are on certain categories of products.  I'm not saying they don't have an effect or that the effect is entirely positive...that's another debate.  But a "war" is pretty strong.  I suppose reasonable people can differ on whether it's a "war" or not, but stating it as a fact is inappropriate.  That's an opinion.  
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