The measures forced contracts in the Huawei Australia-United Group Limited (HUGL) consortium into a majeure event, transport minister Rita Saffioti said in a press statement.
She said that the Perth Transit Authority would continue its plans to "deliver a new digital radio system" for the state's expanding transport system.
She added: "It is extremely unfortunate that the State Government's project - which is limited to a radio network for train drivers and transit guards - has been caught up in the ongoing trade dispute between the US and China.
However, the Radio Systems Replacement project, which involves converting the radio communications system for Perth's urban rail network from analogue to digital, will be delivered through a new arrangement, resulting in several outcomes including the "withdrawal of Huawei Australia from the contract to termination of the project with the consortium", Saffioti added.
Had the State Government decided to keep the HUGL Consortium, the project could result in "unacceptable uncertainty" on the total cost and completion time, with no guarantee such solution would be effective, she added, adding that WA would ensure it "complies with US trade restrictions".
West Australia would continue to work towards building a "high quality radio system at the best possible price for taxpayers," she concluded, adding that such decisions had been taken before the coronavirus pandemic.
— Rita Saffioti (@Rita_Saffioti) March 27, 2020
The news comes as the State Government is set to provide $3m AUD in funds to secure Regional Express (REX) air services across the country, which she stated was "essential" to health and emergency workers amid the coronavirus pandemic.
But the announcement was slammed as "shameful" by Shadow Transport Minister, Libby Mettam, who blasted the Mark McGowan government for failing to deliver the $206m project and "far cry from the gold standard of transparency", she said.
— Libby Mettam (@LibbyMettam) March 27, 2020
She added: "This is a disgraceful attempt to avoid public scrutiny, announcing at 4pm on a Friday during a pandemic its failure to deliver the only Metronet project it had commenced.
The announcements come after US president Donald Trump placed Huawei, ZTE and over 70 Chinese tech firms on an entities list in May last year, barring the Chinese telecoms giant from trading with American firms. Huawei chief financial officer Meng Wanzhou, daughter of company CEO and founder Ren Zhengfei, was also detained by Canadian authorities on behalf of Washington on charges of allegedly violating Iranian sanctions.
The US government also agreed on Friday to ban access to global chipmakers in an attempt to block Huawei's rise in global tech markets, as well as continue pressure countries to avoid working with the Chinese firm.