The fallout from President Donald Trump’s Huawei crackdown may fall hardest on his rural base, already suffering from his earlier aggressive trade moves.
The Commerce Department’s decision last week to put the Chinese telecom giant on a trade blacklist is causing panic among small wireless providers, many of them in Trump-friendly parts of the country, which have Huawei equipment in their networks. And they warn they’ll face big costs, potentially hundreds of millions of dollars, if they have to rip out and replace it.
Amid industry lobbying, the administration gave U.S. companies a 90-day reprieve for doing some types of business with Huawei, but a full ban looms as a possibility. That could add to the harm that the blowback from Trump’s trade war has already inflicted in big swaths of Trump country — for instance, China’s retaliatory tariffs on U.S. exports like soybeans and pork.
Most U.S. farmers have continued to stand by the White House, despite already reeling from a multiyear decline in income and crop prices, but growing anxiety has prompted the administration to spend billions in direct payments to agricultural producers. Similarly, lawmakers of both parties have called for providing $700 million to help small telecom companies caught in the middle of the Huawei fracas.
One example of the Huawei dilemma is Eastern Oregon Telecom, which covers a string of communities in the northeastern part of the state. CEO Joe Franell said he originally bought the Chinese company’s gear, including fiber broadband equipment, because it was 30 percent to 40 percent cheaper than other products on the market. But he estimates the labor and engineering costs of pulling it out and installing new, more expensive parts, as he fears he may have to do in the wake of a U.S. crackdown on Huawei, will run to about $1.4 million.
“If I have to do it myself, it’s a one-year distraction,” Franell said. “When you’re a rural community that is really struggling, a year is a lifetime to wait.”
“I do think this, oddly enough, will impact the Trump-supportive areas of the United States more than the coastal areas,” he said.
While bigger carriers like AT&T and Verizon have avoided incorporating this gear into their domestic systems, Huawei has made inroads over the years selling network equipment to providers in remote and rural parts of the United States. Wireless company filings with the Federal Communications Commission indicate Huawei gear has gone into networks in states like Missouri, Wyoming, Kansas and Montana.
Huawei does business with around 40 companies across the country, said Carri Bennet, general counsel of the Rural Wireless Association, which represents smaller providers. She said a dozen of her own group’s members use gear from Huawei and another Chinese telecom company, ZTE, and she estimates that replacement costs are likely to range between $800 million to $1 billion.
Bennet added that the disruptions involved in such network overhauls could ripple across businesses that rely on the carriers’ wireless service, from oil and gas production to ranching and farming. All of those sectors increasingly use internet-connected technology.