US regulators labeled two large Chinese telecommunications firms a “national security threat” and voted to ban them from a federal subsidy program, the latest move in a broader push to close them off from U.S. customers. The Federal Communications Commission’s action is another blow to Huawei Technologies Co. and ZTE Corp. , targeting one of the firms’ success stories in the U.S. market: Sales of telecommunications equipment to small wireless and broadband providers. Many of those companies rely on federal subsidies, and the FCC is banning federal funds from being spent on buying—or even maintaining— Huawei and ZTE products. The FCC also Friday began a regulatory process that would eventually force U.S. firms to replace Huawei and ZTE equipment they have already bought and installed. That could cost as much as $1.89 billion within two years, the FCC estimated. The move contrasts with a decision by the Trump administration earlier this week to ease some restrictions on Huawei. The Commerce Department said it was permitting some U.S. suppliers to resume shipping to Huawei despite an export restriction. FCC officials have said their decision is unrelated to broader U.S.-China trade talks. In an interview with The Wall Street Journal, Huawei’s Ren Zhengfei discusses how his company will navigate the trade war, concerns over whether its equipment could be used to spy for Beijing and his road trip across America. Photo: Anthony Kwan for The Wall Street Journal FCC Chairman Ajit Pai and the other four members of the FCC’s governing board approved the action unanimously Friday, citing the companies’ ties to the Chinese government and the potential that they could facilitate spying on Americans. Huawei has repeatedly said those fears are unfounded. In recent filings with the FCC, it noted that other countries have decided not to ban the company entirely despite warnings from U.S. officials. “Much of the international community recognizes the importance of a holistic cybersecurity approach that is based on a true risk assessment methodology rather than applying a blanket, country-of-origin ban,” Huawei wrote. The company also said the FCC decision was unlawful, offering several legal arguments that could form the basis for a future court challenge. ZTE didn’t immediately respond to an email requesting comment Friday. The FCC ban affects the Universal Service Fund, an $8-billion-a-year government program supported by fees tacked onto individual phone bills. The fund subsidizes companies that offer service in sparsely populated areas. The ban is set to take effect within about 31 days, though it could take as long as 120 days if Huawei or ZTE contests it. Rural carriers have asked policy makers for funding to replace the Chinese-made equipment. That money isn’t yet secured, though both members of Congress and FCC officials say they are studying their options and want to make money available.