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Stateside companies that are suppliers for Huawei Technologies Co. or buyers of products and services from the Chinese telecom giant should be preparing for the possibility of the U.S. government meddling with that business relationship, according to trade lawyers.

The Trump administration has yet to sanction Huawei or issue an executive order barring the company from doing business in the United States. But the government's ban last year against Chinese telecom ZTE Corp. showed that sweeping enforcement action “can happen overnight,” said Alexis Early, a senior associate in King & Spalding's international trade group in Washington, D.C.

Alexis Early, King & Spalding.

“So it's important to know the status of your company's engagements with Huawei so you're not scrambling to find the information at the same time you're scrambling to implement mitigating activities in case Huawei is subject to some type of enforcement action,” Early said.

She added companies need to “understand where their pressure points would be in the relationship with Huawei,” which means examining flows of goods and services, data and money.

“At this point it's just important to be gathering information and assessing the situation without jumping to conclusions until the process plays out—understanding that there are also larger geopolitical forces at play,” Early said.

As U.S.-China trade talks continue, federal prosecutors have accused Huawei of duping U.S. banks into circumventing U.S. sanctions on Iran and are pursuing related money laundering and fraud charges against the company in the Eastern District of New York. Federal prosecutors in the Western District of Washington in Seattle also have accused Huawei of stealing trade secrets for T-Mobile USA's robotic phone-testing system.

Considering the ongoing criminal cases against Huawei, Adams Lee, an international trade lawyer at Harris Bricken in Seattle, said he believed that “companies dealing with Huawei are only in trouble to the extent that they're helping Huawei deal with Iran.”

“It's the indirect implication of violating U.S. export controls against dealing with Iran,” he said. “The export controls are just really broad and so you have to be sensitive and know your customer and who they're dealing with.”

But that can be difficult, especially in light of the allegations at the center of the sanctions fraud case unfolding in New York. Early said the U.S. Department of Justice apparently “believes that Huawei makes misrepresentations to its counterparties, which in my mind as a trade lawyer immediately triggers questions of how much due diligence the U.S. government expects counterparties to do when transacting with Huawei if the U.S. government says you can't believe them at face value.”

Ronald Cheng, O'Melveny & Myers.

Huawei and the U.S. also are butting heads over a law that bans U.S. government agencies from buying or using Huawei's goods or services. Huawei argues in a federal lawsuit that the ban is unconstitutional.

If the court strikes down the law, the Trump administration would likely feel increased pressure to take executive action against Huawei, said Ronald Cheng, a partner at O'Melveny & Myers in Los Angeles and Hong Kong.

“What seems to be implicit [in Huawei's suit] is if there's going to be a way to do it that would be by executive action,” he said.  

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