Trump appears to backtrack on sanctions relief for Chinese tech giant ZTE amid escalating concerns

Getty Images/PoolPresident Donald Trump.
  • President Donald Trump appeared to backtrack on promises to lift sanctions on the Chinese telecom maker ZTE, tweeting, “Nothing has happened with ZTE.”
  • Lawmakers from both sides of the aisle have criticised such a move, pointing to national-security concerns.
  • Trump’s team has been scrambling to focus the ZTE controversy.

President Donald Trump’s back-and-forth about the Chinese tech giant ZTE continued Wednesday morning as he appeared to backtrack on promises of sanctions relief for the company.

“Nothing has happened with ZTE except as it pertains to the larger trade deal,” Trump tweeted.

Trump previously indicated the US would roll back recently imposed sanctions on ZTE, the second-largest telecom equipment maker in China.

“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” Trump tweeted Sunday. “Too many jobs in China lost.”

A US investigation found that ZTE was selling equipment containing US parts in Iran and North Korea. The Commerce Department banned sales of those parts to the firm, accusing it of lying in its response to the initial discovery.

The ban effectively crippled the company. ZTE said in a statement earlier this month that “the major operating activities of the company have ceased.” Trump tweeted about possible relief four days later.

Lawmakers have national-security concerns about ZTE

Trump’s backpedaling on Wednesday followed days of criticism from lawmakers on both sides of the aisle.

In particular, lawmakers are worried about the ZTE sanctions – which resulted from a national-security investigation – being used as a bargaining chip in a trade deal.

GOP Sen. Marco Rubio attacked Trump’s move after reports that the ZTE decision would come in exchange for China’s lifting tariffs on some American agricultural products.

“About to get out negotiated by #China again,” Rubio tweeted Tuesday. “Apparently ‘deal’ is we lift sanctions imposed on ZTE for helping Iran & N.Korea & they can resume spying & stealing our intellectual property. In return China removes tariffs on US farmers who did no wrong.”

Democratic Sen. Ron Wyden also cited testimony from Trump’s nominee to be the nation’s top counterintelligence official, who said ZTE posed a risk to the US.

Trump’s “comments about ZTE sound an alarm bell for counterintelligence, cyber security, & red, white and blue jobs,” Wyden tweeted Tuesday. “His own top counterintelligence official said ZTE threatens U.S. national security. In my view, giving sanctions relief to ZTE is a big mistake.”

Derek Scissors, a resident scholar at the American Enterprise Institute, said that reversing the sanctions as part of a trade deal would break norms of trade talks and undermine the US position to demand reforms from the Chinese government.

“Worrying about job losses in China is very odd, but it’s not actually important,” Scissors wrote on Monday. “What’s important is whether a giant Chinese state-owned enterprise gets away with breaking American law. If ZTE does, President Trump will be guilty of what he correctly accused his predecessors of – letting China harm the United States.”

The Trump administration is trying to blunt the criticism

Hoping to stem the national-security concerns, Trump administration officials have attempted to soften the president’s promises.

Commerce Secretary Wilbur Ross said his department was looking into “alternate remedies” for ZTE sanctions, but he also tied the sanctions to national security.

“Our position has been that’s an enforcement action, separate from trade,” Ross said Monday.

Larry Kudlow, the president’s top economic adviser, said ZTE was “really divorced from the trade story.”

But Trump’s tweets – even those on Wednesday – almost always refer to ZTE in the context of trade.

“Our country has been losing hundreds of billions of dollars a year with China,” he said. “We have not seen China’s demands yet, which should be few in that previous U.S. Administrations have done so poorly in negotiating. China has seen our demands.”

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