WASHINGTON—The Trump administration considered banning China’s Huawei from the U.S. financial system earlier this year as part of a host of policy options to thwart the blacklisted telecoms equipment giant, according to three people familiar with the matter.
The plan, which was ultimately shelved, called for placing Huawei Technologies, the world’s second largest smartphone producer, on the Treasury Department’s Specially Designated Nationals (SDN) list.
One of the people familiar with the matter, who favors the move, said it could be revived in the coming months depending on how things go with Huawei.
The plan was considered by the White House National Security Council, and seen by officials as a nuclear option atop a ladder of policy tools to sanction the company, two of the people said. Such a designation can make it virtually impossible for a company to complete transactions in U.S. dollars.
Administration officials drafted a memo and held interagency meetings on the issue, according to one of the people, showing the extent to which administration officials mulled deploying the United States’ most aggressive sanctioning tool against the Chinese company.
Its use was tabled in favor of other measures, such as placing Huawei on a trade blacklist, which forces some suppliers to obtain a special license to sell to it.
Huawei did not respond to a request for comment. A Treasury spokesperson said the agency “does not comment on investigations or prospective actions, including to confirm whether one exists.”
Huawei would have been among the largest companies ever added to the list, which has included Russia’s Rusal, the world’s second largest aluminum company, Russian oligarchs, Iranian politicians and Venezuelan drug traffickers.
Annie Fixler, a cyber expert at the Foundation for Defense of Democracies think tank, said designating the company “would have broad, widespread implications for Huawei across the globe,” noting that its business would be “severely impacted” in Europe and in Asia outside of China.
Some lawmakers still see designating Huawei as worth considering.
“Given Huawei’s relentless drive to dominate the 5G landscape, it is one of the most urgent national security threats facing the free world,” Republican Congressman Michael Gallagher said.
“All options should be on the table in order to impose maximum pressure,” he added.
The U.S. government has brought criminal charges against Huawei, alleging theft of trade secrets, bank fraud, violations of U.S. sanctions against Iran, and has sought to convince allies to ban it from 5G networks over spying fears.
By Alexandra Alper