Trump's $1.3 Billion Fine Plan On China's ZTE Faces Immediate Resistance

Bloomberg’s Kathleen Hays reports on President Trump reconsidering penalties against ZTE as a favor to China’s Xi

Bloomberg’s Kathleen Hays reports on President Trump reconsidering penalties against ZTE as a favor to China’s Xi

Treasury Secretary Steven Mnuchin said earlier that the USA didn't mean to "put ZTE out of business" by penalizing the company for violating US sanctions against Iran and North Korea. But it then went a step further to impose a seven-year ban on USA companies buying and selling ZTE products. "It should be President Xi that writes the book because he's taken us to the cleaners on ZTE", the New York Democrat said in a speech to the Senate, referring to Mr. Trump's book on dealmaking.

"Sadly #China is out-negotiating the administration & winning the trade talks right now". And the president tweeted that under a potential deal, China would buy "practically as much as our farmers can produce".

In response to Mr Mnuchin's comments, Democratic Senator Chuck Schumer of NY, a frequent Mr Trump critic, said he thought it would be a mistake for Mr Trump to settle for "a promise to buy goods" with so many larger issues on the table. "They have avoided tariffs & got a #ZTE deal without giving up anything meaningful in return by using N. Korea talks & agriculture issues as leverage", he tweeted. "It's a matter of sending a message about how strongly we feel about national defense and about a telecommunication company and how critical that is to national infrastructure but I do not see it as a rebuke". If Trump makes a trade deal that involves lifting the ban on ZTE, are Ryan and McConnell going to pull out the rug from under him and kill it by taking ZTE off the table?

Ilan Goldenberg, the director of the Middle East Security Program at the Center for a New American Security, also took the Trump team to task over the negotiations. "So I'm looking at it", he said.

He noted that ZTE depends on USA -made components to make most of its products, and he has couched the review as a way to protect jobs in both China and at home, and to ease the path to a broader trade deal.

Tension between the two sides has been growing since the Trump administration proposed tariffs of $US50 billion ($66 billion) on Chinese goods and said it might extend the levies to an additional $US150 billion ($199 billion).

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US Treasury Secretary Steven Mnuchin on Monday denied a quid pro quo and maintained that ZTE discussions are separate from trade talks. Chris Coons, the ranking member on the committee, said he was disappointed Mnuchin didn't answer questions more directly.

The source argued that Mnuchin was "freelancing" with his comments on Sunday and said Mnuchin was in danger of becoming "Rex Tillerson 2.0", referring to the former secretary of state whom the President rebuked for getting ahead of his positions.

"Given the increasing interaction between the two countries, we can not assure you they will not encounter more frictions or disputes in the future", advised Chinese foreign ministry spokesman Lu Kang, at a briefing. He also bucked a report that he was nearing a deal to lift the ban on ZTE, saying there was no deal.

In a separate bipartisan letter Tuesday, 27 senators urged the White House "not to compromise lawful USA enforcement actions against serial and pre-meditated violators of United States law, such as ZTE". The Senate measure, introduced by Sen. Republicans *have* been willing to defy POTUS when it comes to punishing rival powers for threatening USA national security. John Cornyn, R-Texas., that would do just that.

The Republican-controlled House of Representatives is weighing a proposal that would block the sale of ZTE products and those of another Chinese company, Huawei Technologies [HWT.UL], until national security officials certify they are safe.

When Cornyn, the sponsor of a bill to strengthen foreign transactions oversight, was asked about other legislative solutions, he responded, "I'm sure we'll be having that conversation quite publicly and it will manifest itself in a number of ways".

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