US drafts rules to protect American tech from foreign sabotage

The rules would address dilemmas the U.S. faces with Chinese tech firms like Huawei and ZTE

The Commerce Department is seeking public comment on rules implementing a White House directive to safeguard Silicon Valley's supply chain from foreign vendors who might exploit it on behalf of hostile nations.

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Under President Trump's executive order issued in May, the commerce secretary, in consultation with other agencies, is given the authority to ban or limit the use of high-tech equipment or parts from companies owned or regulated by overseas adversaries. Essentially, the agency will be able to force American firms to alter how they make products that rely on such components, empowering it to address dilemmas like the ones posed by Chinese tech firms such as Huawei and ZTE. Both face sharp restrictions on business in the U.S. because of security concerns.

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The Commerce Department has opened a 30-day period for public comment on the proposed standards, which govern how the agency will identify, evaluate and address supply-chain issues.

Subject to 30 days of public comment before they're finalized, the rules follow a decision by the Federal Communications Commission last week to bar U.S. companies from using its $8.5 billion-a-year Universal Service Fund to purchase equipment from Huawei and ZTE.

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FOX Business’ Edward Lawrence contributed to this report.