Chinese telecommunications company Huawei is reportedly preparing a law suit against the U.S. government, according to a recent report in the New York Times. The company, which has been accused of sanctions violations and trade secret theft, claims that the U.S. is acting outside of its constitutional rights.

This news emerges as the CFO awaits an extradition trial in Canada, and at the height of U.S./Chinese trade negotiations.

Huawei Claims the U.S. Government is Engaging in Anti-Competitive Practices

The United States believes that Huawei not only violated international sanctions by trading with Iran and other nations, but that it also exploited American companies.

FBI Director Christopher Wray said in a statement in January that charges against the copmpany “are the result of years of investigative work by the FBI and our law enforcement partners. Both sets of charges expose brazen and persistent actions to exploit American companies and financial institutions, and to threaten the free and fair global marketplace.”

Huawei has always maintained its innocence and believes that the U.S. government is interfering with its ability to operate lawfully. The U.S. is investing billions into wireless 5G deployment, but companies like Verizon and others are forbidden from using they equipment.

The company will reportedly argue that the U.S. is essentially engaging in an act of attainder – meaning that the government is declaring Huawei guilty of a crime without trial. This relates to the U.S. ban on Huawei equipment, and its efforts to convince allies to act similarly. Australia and the United Kingdom have also ceased the purchase of  technology for their telecommunications networks.

Article One, Section 9 of the United States Constitution specifically prohibits the passing of bills of attainder.

More at Stake in the Huawei Saga

Investors will note that this is only the most recent piece of high level political and financial news regarding Huawei. Late last year, CFO Meng Wanzhou was arrested in Canada for allegedly attempting to circumvent sanctions on Iran. Meng is currently awaiting trial for extradition to the U.S.

One of China’s largest companies. Despite being privately owned, it has deep ties to the Chinese Communist Party. Ongoing trade negotiations could be impacted by this latest development.

A representative of the Department of Homeland Security told the Wall Street Journal this year that “Huawei has a profit incentive to act in good faith, but the [Chinese Communist] party will get what they want.”

Huawei is likely to commence formal legal action in the coming weeks. Investors should follow this story closely to track its impact (if any) on U.S./China relations.