And finally, Wall Street has posted another day of gains, as it continues to recover from Monday’s sharp losses.

The Dow ended the day up around 214 points, or 0.8%, at 25,864.

The clampdown on Huawei isn’t causing a panic sell-off, partly because Donald Trump is also suspending plans to raise tariffs on European and Japanese cars for six months (this emerged yesterday).

But things are moving fast, with Wilbur Ross saying tonight that the ban on Huawei buying US components kicks in on Friday.

So there could be more volatility ahead, especially as China mulls its response.

Goodnight! GW

It’s notable that the major advanced economies don’t agree on how to treat Huawei.

Not everyone sees the firm as such a security threat, although the US’s move could prompt a change of heart....

Here’s our round-up of how other countries - including Australia, Belgium and Japan - are handling the issue.

There is precedent for a major Chinese firm being blacklisted by the US.

Last year, handset maker ZTE was hit with a “Denial Order, banning it from purchasing mobile components from American companies.

The ban was meant to last seven years, although it was actually lifted after a few months. Even so, the results weren’t pretty, as the FT points out tonight:

When smaller rival ZTE was shut out of the US, its smartphone shipments plummeted by about 75 per cent and it blew a Rmb7.8bn ($1.1bn) hole in its bottom line in the first half of last year.

With revenues last year of $105bn, Huawei is a lot bigger than ZTE and its greater focus on telecoms infrastructure equipment and high-end phones means the impact of an export ban “would be material”, Credit Suisse analysts said in a report at the end of last year.

Huawei has also argued that America is shooting itself in the foot, by banning its technology from its networks.

Earlier today a spokesperson said:

Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers.

In addition, unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues.

It is also suggesting that jobs could be lost -- not what a president wants ahead of a re-election year....

US cybersecurity expert Adam Segal points out that the ban on selling equipment to Huawei will hurt some American companies.

Now Huawei is on the Entity List, scores of US companies could suffer a drop in sales:

America’s commerce secretary, Wilbur Ross, has just told Bloomberg TV that the new restrictions on Huawei will start tomorrow (Friday).

He’s also tried to distance the clampdown on Huawei from the ongoing trade dispute with China.

Charlie Dai, a Beijing-based analyst at Forrester Research, reckons the curbs on Huawei could slow global take-up of 5G mobile (which should be faster, more flexible and offer greater capacity).

He fears a significant negative impact, given Huawei’s leading position in the space, saying (via Bloomberg):

“Nokia and Cisco could address the gap to some extent, but the overall adoption will be slowed down, which eventually will be harmful to telco carriers and consumers around the world.”

Wall Street has now clawed back the losses suffered at the start of this week, after the trade war blew up.

The Dow is now up 278 points, or over 1%, at 25,926

Ken Odeluga of City Index says investors are upbeat, despite president Trump’s various confrontations:

Washington’s confirmed ban of Huawei and 70 affiliates, inevitably exacerbating a trade dispute with Beijing, vies with stronger earnings and signs of bargain hunting as chief influences on global shares

A positive start despite the White House’s efforts, joins other clues suggesting risky markets could soon draw a line under weakness that became pronounced last month.

Wall Street isn’t panicking about the moves against Huawei.

The Dow has gained 117 points in early trading in New York, to 25,765 points, up 0.45%.

Chinese scholar, Jin Canrong of Renmin University, says China has three trump cards it can play in the trade war.

— Banning exports of rare earth minerals to U.S.;

— Selling off U.S. treasuries;

— Punishing U.S. companies currently doing business in China.

Writing in the state-controlled Global Times, he says these can help China win the dispute:

The first one is a total ban on the export of rare earths to the US. Rare earths are the raw materials for non-ferrous metals, which are indispensible in chip-making. China’s rare-earth production accounts for a majority of the world’s total.

The US has its own rare-earth reserves but it would take years for the US to restore its own rare-earth industry to meet its needs for chip production. Even when the US finishes re-establishing the industry, China would have completed R&D on high-end chips and started to export its own products.

US national debt is the other card. China holds more than $1 trillion of US Treasury bonds. China made a great contribution to stabilizing the US economy by buying US debt during the financial crisis in 2008. The US would be miserable if China hits it when it is down.

The last card would be American companies’ market in China. US companies entered China at a very early time, right after China’s reform and opening-up.

They reaped large profits in the Chinese market, higher than Chinese companies earned in the US market.

The US is anxious and arrogant. The growing nationalist sentiment of the US could be beneficial to China.

China’s state media is often a good guide to the Beijing leadership’s thinking (or how it wants the people to see an issue),

More here:

EIU analyst Nick Marro thinks China could hit back against US companies soon - which would further escalate the trade conflict.

Matthew Kendall, Chief Telecoms Editor at The Economist Intelligence Unit, fears that the crackdown on Huawei will hurt smaller US telecoms companies.

They could face a bill to rip the Chinese firms’s kit out of their networks, and replace it with rival products instead.

While the bigger carriers are likely to be able to absorb the higher costs associated with using equipment from Nokia, Ericsson and smaller national manufacturers, it is the smaller start-up and rural US carriers that will suffer the most, with many of them already using Huawei equipment in their networks.

Whether the US will propose any form of financial assistance for small carriers to remove Huawei equipment is not yet clear, but competition and timescales for infrastructure delivery in regional US markets are likely to be adversely affected by this order, adding to uncertainty for small and medium-sized players who are likely to pass on costs to consumers.

Back in London, Lloyds Banking Group is being savaged by shareholders over the fraud scandal at its Reading branch, and over the whopping pay packets enjoyed by top bosses.

My colleague Kalyeena Makortoff is attending Lloyds’ AGM, and reports:

Some investors are particularly unhappy that CEO Antonio Horta-Osorio picked up a £6.27 million pay packet last year.

Lloyds, though, claims that the “turnaround” since the financial crisis justifies such payments.

Donald Trump hasn’t yet tweeted about the decision to blacklist telecoms firms who pose a security threat, and to restrict US companies from selling their tech to Huawei.

Professor Costas Milas of the University of Liverpool thinks that’s an encouraging sign:

Donald Trump took the very wise decision not to tweet the news that he put Huawei on exports blacklist. Trump has 60.3 million Twitter followers and the 13th most popular Twitter account in the world.

Not so long ago, a tweet by Trump on Turkish steel tariffs resulted in a massive drop of the Turkish currency. Being aware of Twitter’s power to move financial markets (see here for research) Donald Trump restrained, this time, from using his Twitter ‘weapon’ to put enormous pressure on Huawei, the Chinese government, and financial markets (the Telecoms industry in particular).

Which makes me think that Trump has only fired a warning shot in the case of Huawei...

France’s president, Emmanuel Macron, has poured a carafe of cold water over the idea that his government could blacklist Huawei.

He told CNBC that security concerns were important, but that wasn’t a reason to chuck out foreign companies.

“There is no over-protectionism vis-a-vis any of the big global tech (firms) because we need them to fertilize our ecosystem, we want to be stronger and stronger and create maximum jobs.

For sure on some issues we have restrictions, not focused on Huawei, but to preserve our national security and our sovereignty for critical reasons.”

Being banned from the US market won’t cause Huawei too much short-term pain - it barely sells any equipment to American carriers at the moment.

But being added to the Entity List - which blocks US firms from selling equipment to Huawei - is a much more serious blow.

Eurasia Group analysts Paul Triolo, Michael Hirson and Jeffrey Wright call it “a grave escalation” in the dispute with China. They believe it could threaten the company’s future, and leave customers vulnerable.

They warn:

The firm would be unable to upgrade software and conduct routine maintenance and hardware replacement.”

In another blow to Huawei, a report has just recommended that it is completely banned from supplying 5G mobile networks in the UK.

The report, drawn up by Conservative MP Bob Seely and academics John Hemmings and Peter Varnish, says Huawei’s links to the Chinese government make it a “potential security risk”.

Our security editor Dan Sabbagh explains:

They argue that a decision announced by Theresa May last month, following a fraught meeting of the National Security Council (NSC), to allow the company to supply “non-core” equipment should be overturned because using the company’s technology presents “risks”.

In a report from the Henry Jackson Society (HJS), the authors go on to claim Huawei “has long been accused of espionage” – a claim denied repeatedly by the firm – and notes that “while there are no definitely proven cases”, a precautionary principle should be adopted.

CNN points out that Huawei is already fighting political pressure across the globe -- with some governments keen to ban the company, but others open to working with it.

They say:

While some US allies -- notably Australia and New Zealand -- have followed Trump’s lead on Huawei, others have been more reticent. Europe in particular is split over whether to ban the company, a market leader on 5G technology which is expected to be the lifeblood of the new economy.

The Huawei issue cuts to the heart of tensions between security and economic interests when it comes to China and Chinese influence. While many countries around the world share Washington’s suspicion -- even hostility -- towards Beijing, they are unwilling to take the economic hit that openly standing apart from China would entail.

The UK is leaning towards allowing Huawei to provide equipment for “non-core” sections of Britain’s upcoming 5G networks, according to a top-level leak that led to the sacking of defence minister Gavin Williamson.

Expert reaction to the Huawei ban is flooding in.

Roger Sheng, a China-based analyst with Gartner, believes Huawei could be extremely badly hurt if it can’t buy IT products from American companies (Bloomberg reports):

“The impact is well-beyond its 5G ambitions because without these American suppliers like Qualcomm and Marvell, it can’t even keep a normal operation.

One question remains unanswered though, is how strict will the U.S. execute the ban.”

Robin Niblett of the Chatham House thinktank argues that the US is right to be wary of China, but also criticises president Trump for his willy-nilly use of national security rules:

Euro Intelligence analyst Wolfgang Munchau warns that America could go further, and threaten to ban European companies who keep dealing with Huawei.

China’s commerce ministry has criticised America’s decision to blacklist Huawei, and warned that it could retaliate.

Commerce ministry spokesman Gao Feng accused Washington of acting unfairly, by using security laws to restrict Huawei from buying components from US companies.

“China has emphasised many times that the concept of national security should not be abused, and that it should not be used as a tool for trade protectionism.

“China will take all the necessary measures to resolutely safeguard the legitimate rights of Chinese firms.”

Gao also denied that president Xi has agreed to meet Trump to resolve the issue:

America’s new broadside against Huawei is undermining hopes that presidents Trump and Xi can agree a trade deal at next months’ G20 meeting.

Lukman Otunuga, research analyst at FXTM, says:

Investor sentiment has swung back and forth this week due to the persistent uncertainty and ever-changing jigsaw puzzle that is being mapped out around global trade developments.

Asian shares are mostly mixed during early Thursday trade amid the contrasting signals that are being delivered to investors in regards to US-China trade tensions. While there is hope on one side of the table that there will be a handshake between the US and Chinese authorities at the G20 next month to smoothen the recent escalation, this is being met with news that the US government will ban Huawei’s access to the US markets over national security concerns.

The conflicting signals over trade are likely to simply spark more uncertainty and confusion in the market, and investors will continue to scatter and reassess their appetite towards taking on risk as a result.

Reuters’ Tokyo bureau report that Japanese robotics makers have been hit by escalating trade tensions in the last couple of weeks:

Shares of Fanuc Corp, which makes industrial robots, have tumbled 8.5% so far this month.

The company saw a significant drop in its China sales for the fiscal year ended March 2019. China now accounts 19% of its overall sales, down from 30% a year ago.

Shares of servo motor maker* Yaskawa Electric have dropped 9.2%, while Tokyo Electron and Advantest Corp are down around 7.5% each, underperforming a 5% drop in the Nikkei benchmark index.

“Machinery and exporters’ stocks are the most hit and will likely stay pressured in the next 2-3 months,” said Naoki Kamiyama, chief strategist at Nikko Asset Management.

[* - servo motors use negative feedback to automatically correct a mechanism -- perhaps to prevent a robot falling over, for example}

Jim Reid of Deutsche Bank has just attended a conference on the West Coast of America, and reports that Donald Trump’s hard line on Huawei will be popular in political circles (if not on Wall Street...)

At the conference I was attending there was a panel on US politics with a couple of Washington insiders and a couple of things struck me from the conversation. Firstly, virtually every market person I’ve spoken to over the last few months wants a deal, pretty much any deal.

However, in listening to the panel it’s quite clear that China has few friends on the trade front in Washington across the political spectrum. Also, the view was that behind closed doors virtually all US corporates were supportive of being more aggressive with China on Trade.

Patrick Zweifel of Pictet Asset Management believes that highly globalised countries, such as Singapore, South Korea and Ireland, will suffer badly if the trade war intensifies:

It’s been quite a week in the US-China trade war, points out analysts and broadcaster Louise Cooper:

Republican senator Tom Cotton has tweeted that it’s “RIP” for Huawei’s ambitions in 5G telecoms networks.

Donald Trump has certainly blocked Huawei from getting involved in America’s new high-speed networks. However, the company is playing a role in the UK.....