US government employees, contractors and agencies might have to ditch most of their Huawei and ZTE tech. The President has signed the Defense Authorization Act into law, and part of it is a ban on devices and equipment used to route or view user data made by the two companies and some other Chinese manufacturers. Government contractors can still use components that don't handle user data in any way. But since they still have to get rid of existing parts and devices that do, the law includes a directive for agencies to prioritize funding for businesses that have to replace their equipment.
While the two companies might lose clients due to the new law, it could have been much worse for ZTE. The Senate already voted to reinstate a ban that would continue preventing ZTE from working with American manufacturers. It could have been a death sentence for the tech giant, seeing as it relies on US chipmakers for parts. However, the House of Representatives passed a version of the Defense Authorization Act without the language that reinstates those sanctions. The two chambers worked on a compromise after the Senate gave up on trying to restore the ban, and this measure is what they came up with.
The US government considers Huawei and ZTE as security threats and has been seeing them as such for a long time. Back in 2012, the Congress published the results of an 11-month probe wherein the investigators noted how the companies failed to explain their ties to the Chinese government. Earlier this year, the Pentagon banned the companies' phones from military base retailers, citing security concerns. And just recently, the Democratic National Committee advised candidates running in November not to allow their staff to use devices by either company, especially after what happened during the 2016 Presidential Elections.