July 23, 2021

US blocks Xiaomi from American imports and investment

US blocks Xiaomi from American imports and investment

The Trump administration is dubbing Xiaomi a national security threat in a fashion similar to how it did Huawei and ZTE. However, the “Communist Chinese military company” label has a greater effect to this particular tech manufacturer than the others.

Under the authority of Section 1237 of the National Defense Authorization Act, Xiaomi will not be able to acquire goods and services from U.S. vendors — many Chinese companies are already subject to this restriction being placed on the Commerce Department’s Entity List. One of the consequences that hasn’t been relevant as much up until now is the requirement for U.S. investors in the company to divest their holdings in the company.

Whereas Huawei and ZTE are backed primarily by government-held funds or domestic traders, for Xiaomi — which raised billions of dollars from global sources for a public listing in 2018 — this may not only affect its consumer output of smart home appliances and accessories not to mention its smartphones, but its prized presence in foreign markets including Western Europe.

Investors would be given until November 11 to clear their stakes — perhaps enough time to let the government or patriotic stock buyers ease the sting.

Donald Trump’s White House has been pushing big position appointments and policy declarations ahead of the inauguration of President Joe Biden seemingly in attempts to make lasting marks on the federal government. Chinese drone maker DJI was recently added to the Entity List.

Xiaomi share price on over-the-counter markets dropped 9% in U.S. daytime trading. Its Hong Kong listing is expected to follow suit when the floor opens.

If you’re looking to import a Mi 11 with that fancy new Snapdragon 888, you may need to do it now.

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