It's also possible that this will cause Huawei and the Chinese government to pour funding into Chinese chip designs. Eventually, China will become less dependent on the US and the US will lose another point of influence.
Is this bad for Huawei in the short term? Of course. But is this hurting the Chinese economy in the long term? I don't think so.
My bet is Huawei will pick up a team or company (lineage team start packing your bags) to move forward with minimal risk. That or partner with a few other b-list manufacturers and create an alternative.
Hell even Google itself is trying to drop Android.
You can bet that no bank or whatever will abandon such a large fraction of the users of their app, but is already calling people to get the Huawei OS version of their app started.
Especially given that Huawei OS looks to be a fork of AOSP with the proprietary Google Services replaced with proprietary Huawei services. The developpers will just fork the existing app, using Android studio, and the same language!
? WhatsApp, Facebook, Facebook Messenger, Instagram, Uber, GoogleMaps, Twitter..
There are web replacements for all of these, but people are choosing to use them in app form overwhelmingly. Maybe that will change, but it would be a pain to try a cell today that couldn't run all of these apps very well.