Sources: US withdrew proposed rules which would have made it harder for US firms to sell to Huawei from overseas facilities, following DOD, Treasury objections
Commerce had drafted rules extending US export controls to foreign-made components destined for Huawei, but pulled them after DOD and Treasury objected — an interagency split over how hard to squeeze Huawei's overseas supply chain. The reprieve was short-lived: within weeks, sources reported the Pentagon dropped its opposition to the same effort (DOD reversed course on the overseas-facility rules), clearing the path for the restriction to return.
The episode set the template for what followed: by early 2023, Commerce had moved from drafting rules to simply stopping licenses for US tech exports to Huawei outright, ahead of a broader ban. The same draft-and-withdraw rhythm reappears years later, when Commerce withdrew a planned tightening of AI chip exports after circulating it to agencies.
First-order effects
Huawei keeps access to US-origin components flowing through overseas facilities without a new licensing hurdle, and American suppliers avoid a compliance burden that would have covered foreign-made shipments.
Commerce's rulemaking stalls at the interagency stage, leaving the restriction unenforced until the objecting departments — DOD chief among them — change position.
Second-order effects
Treasury and DOD objections force the control debate into internal bargaining rather than public rulemaking, so Huawei's suppliers get no durable regulatory certainty either way.
Once DOD drops its opposition weeks later, the same restriction revives, signaling to suppliers that the reprieve was procedural, not a policy retreat.
Third-order effects
The pattern — draft a rule, withdraw it under interagency objection, then tighten anyway — becomes the standard path for US tech controls on Huawei, ending in the license freeze and near-total ban of 2023.
Export-control policy consolidates around managed escalation: agencies test restrictions privately before imposing them, making withdrawals like this one negotiating moves rather than reversals.
The trend: US export controls on Huawei advance through repeated draft-and-withdraw cycles in which interagency objections delay, but do not prevent, eventual tightening.
Commerce Secretary Wilbur Ross said new rules are coming soon that will put more limits on U.S. companies that supply Huawei https://www.bloomberg.com/...
Proposed rules making it harder for U.S. firms to sell to Huawei from overseas facilities are withdrawn after objections from the Pentagon. Trump admin finding it tough to hit Huawei without hurting US firms too. https://www.wsj.com/...
DC is now a confusing world in which the Department of Commerce is keen to cut off the sales of US companies, while the Pentagon is trying to protect the ability of technology leaders (i.e. chips and aviation companies) to make revenue to fund the next round of R&D. https://twitt…
“The Pentagon is concerned that if U.S. companies can't continue to ship to Huawei, they will lose a key source of revenue—depriving them of money for research and development needed to maintain a technological edge, the people said.” https://www.wsj.com/...
Commerce officials have withdrawn proposed regulations making it harder for U.S. companies to sell to Huawei from their overseas facilities after objections from DoD and Treasury, people familiar with the matter said. https://www.wsj.com/...
This BIG news will create shockwaves in tech supply chains. If the de minimis threshold is cut or the direct sales rules changed as expected, efforts to “design out” US tech will accelerate. 1/ https://twitter.com/...
NEWS: Secretary Ross tells me new rules that would further restrict U.S. sales to Huawei “will come out near-term.” Industry sources call the debated changes to de minimis and direct product rules a belt and suspenders approach to cut off U.S. supplies. https://www.bloomberg.com/…
“The US gov't is taking a close look at #exportcontrol mechanisms after seeing how @Huawei was able to continue to buy from US companies. Some US companies have kept selling to Huawei by citing rules that limit the US govt's ability to restrict exports.” https://www.bloomberg.com…