ZTE Ban Lifted For Now But Bigger Challenges On the Horizon
After being swallowed up by a trade ban issued from the US Commerce Department in April, ZTE has finally received a bit of good news. The Chinese telecom giant will once again be able to access and trade with American technology companies, but colossal net losses, an awaited meeting from the House, and a potential roadblock from a presidential veto mean there is still a long road ahead.
The ban came from failing to follow through with reparations after violating Iran and North Korea sanctions. After the ban in April, ZTE was essentially cut off from major technology partners such as Qualcomm, leaving many of their products dead in the water. President Trump then offered to cut a deal, allowing ZTE to pay a $1 billion fine and put $400 million in an escrow account.
However, last night the US Senate circumvented the entire situation and passed an annual defense bill that included a measure to undo the decision to lift the ban.
The entire situation has become a point of contention in the White House, with US Commerce Secretary Wilbur Ross noting that "Prior administrations have been real patsies for the Chinese and for other countries. They've never really pushed back," Ross said. "So I think the Chinese are well aware there's a new marshal in town and it's called Donald J. Trump, and he's a very, very good shot."
But the deal came under fire from Senator Chuck Schumer, who accused President Trump of shooting "blanks" at China while aiming his trade fire at allies such as Europe and Canada.
"There is absolutely no good reason that ZTE should get a second chance, and this decision marks a 180-degree turn away from the president's promise to be tough on China," he said in a statement.
Forbes has already reported that nearly $6 billion, or 25%, was wiped off the market in just three days last week after its shares finally resumed trading on both the Hong Kong and Shenzhen stock exchanges. Unfortunately, there are a lot of moving pieces and even more hardships on ZTE's road back to America.
President Trump is set to meet with lawmakers tomorrow to discuss the ZTE provision.