Pentagon blocked even tighter rules on Huawei sales, report says

The Commerce Department reportedly pulled back the rules after objections from the Department of Defense.

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Huawei is the world's No. 1 telecom supplier and No. 2 phone manufacturer, but it's a pariah in countries like the US.

Angela Lang/CNET

The US Department of Defense reportedly blocked proposed regulations that would have made it even harder for US companies to do business with Huawei . After objections from the Pentagon, the Commerce Department pulled back a proposed rule that would have further limited what US companies can sell to Huawei from outside the country without an export license, according to a report Friday from The Wall Street Journal. 

The Pentagon reportedly felt the new rules would take a key revenue source away from US companies that's needed to keep a "technological edge."

Currently, components and other electronics made overseas that "contain less than 25% U.S.-made content subject to export restrictions" can be sold to Huawei without a license, according to the Journal.  The proposed rule would have reportedly dropped that down to 10%.

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A representative for the Pentagon said Friday the department is aware of the Commerce Department's proposed rule change but wouldn't "prematurely discuss ongoing interagency collaboration."

A spokesman for the Commerce Department declined to comment on the report, saying "if or when we have something to announce, we will do so."

In November, the Commerce Department for the third time extended a temporary license that lets American companies do business with Huawei. The department blacklisted Huawei following a May executive order from President Donald Trump that effectively banned the company from US communications networks. It required US companies to get a license to do business with Huawei, which faces national security concerns due to its cozy relationship with the Chinese government. 

Huawei has  denied any wrongdoing and continues to maintain its innocence.  The company didn't immediately respond to a request for comment. 

Originally published Jan. 24, 8:11 a.m. PT.
Update, 8:41 a.m. PT: Adds response from Commerce Department.