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President Trump’s position on Chinese trade is unclear after reversal of ZTE ban

In an unexpected tweet, President Trump indicated that he will work with President Xi to resume operations of ZTE Corp.—a firm that recently plead guilty to illegally selling US technology in violation of US and UN sanctions. American policymakers have called for President Trump to clarify his position on Chinese trade and perceived unfair and illegal trade practices by Chinese firms operating domestically and abroad.

In March 2017, Chinese telecomm company ZTE Corp. was fined US$1.1 billion after pleading guilty to obtaining and illegally shipping US-made tech equipment to Iran and North Korea in violation of US sanctions. ZTE admitted to knowingly violating US export controls, and to lying to federal investigators and internal legal counsel. In addition to the fine, ZTE submitted to three-year period of probation, during which the firm will be independently monitored. The US Commerce Department also placed a seven-year ban on selling ZTE components by US firms.

In response to the US ban, ZTE suspended operations indefinitely. However, on May 13, President Trump indicated that he would work with President Xi in the coming weeks to revive ZTE operations. On twitter, President Trump stated: “Too many jobs in China lost. Commerce Department has been instructed to get it done!” This tweet seems at odds with President Trump’s previous rhetoric concerning perceived unfair Chinese trade practices, specifically President Trump’s recent threat to impose US$150 billion in tariffs on Chinese goods.

Several representatives have since expressed confusion with respect to President Trump’s positon on Chinese trade: in response to the President’s tweets, Mark Rubio stated that “We are crazy to allow [ZTE] to operate in U.S. without tighter restrictions”. Democratic leader Chuck Schumer stated that he was “Shocked. I think it shocked a lot of people in the president’s own cabinet”. Some have speculated that President Trump will use ZTE as a bargaining chip to relax Chinese import restrictions and tariffs on American agricultural products, such as soybeans, that have negatively impacted the American Midwest, where much of President Trump’s voter base resides.

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