Currently, the USA plans to continue sharing its intelligence with Germany, but officials reportedly plan to decrease the extent of access if Huawei equipment is in use in the future.
Huawei recently filed a lawsuit against the USA government for labeling it a security risk and limiting its access to the American market.
According to the Wall Street Journal, US Ambassador Richard A. Grenell sent a letter to the German economy minister, which said that Berlin should discriminate against Chinese companies like Huawei when selecting providers of 5G equipment to upgrade its networks.
The letter, which was dated Friday and reviewed by The Wall Street Journal, marks the first known time the USA has explicitly warned an ally that refusing to ostracise Huawei could lessen security cooperation with Washington. -German cooperation could only continue at its current level if Chinese firms were excluded from the construction of the network.
Reportedly, Huawei has no plans to sue the Australian government, for now.
The U.S. has been pushing back against China's technological expansion by asking that other countries refuse to adopt Huawei's 5G infrastructure, which Washington says poses security threats. As CNBC reports, both the 2017 National Intelligence Law and the 2014 Counter-Espionage Law mandate that Chinese firms comply with state security efforts.
While the United States embassy in Berlin would not confirm that a message was sent, the German Federal Economics Ministry did tell the Frankfurter Allgemeine Zeitung (FAZ - auf deutsch) that the letter had been received and would be "answered promptly".
Last week, Germany said it didn't want to ban Huawei from building its 5G network, noting that it'd tighten security around all vendors instead, Reuters reported.
Germany, anxious to not get sucked into the maelstrom of an ongoing US-China spat over a multitude of issues including trade, has taken a cautious stance on the issue.
Tensions have also run high over the detention of Huawei chief financial officer Meng Wanzhou, who is facing possible extradition to the US on allegations she committed financial fraud in the course of allegedly violating worldwide sanctions on Iran.