Trump pledges to get ZTE back in business

Shanghai ZTE Corporation R&D Center

Trump pledges to get ZTE back in business

President Donald Trump said in a tweet Sunday that he's working to give China's ZTE "a way to get back into business, fast".

U.S. commentators say the tone of the tweet is a dramatic shift for Mr Trump, who has consistently accused China of stealing United States jobs.

"It is unacceptable that [the US Commerce Department's Bureau of Industry and Security] insists on unfairly imposing the most severe penalty on ZTE even before the completion of investigation of facts", ZTE said in a statement in April. Schumer tweeted in response to Trump's earlier tweet on the matter.

President Trump announced he is collaborating with his Chinese counterpart Xi Jinping to come up with a rescue plan to save the vulnerable company from collapse in a pair of tweets on Sunday.

US intelligence assesses that both companies could use their phones to spy remotely for the Chinese government (both ZTE and Huawei have denied these claims in the past).

The U.S. Commerce Department directed companies to stop exporting to ZTE in mid-April, saying the Chinese firm violated the.

White House spokeswoman Lindsay Walters confirmed that US officials are in contact with Beijing about ZTE.

And Chinese officials protested against the ban in discussions with a high-level U.S. delegation last week and said the U.S. side would discuss the matter with President Donald Trump.

Trump expects Commerce Secretary Wilbur Ross "to exercise his independent judgment, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE based on its facts", Walters said.

The U.S. President has proposed tariffs on as much as $60 billion in Chinese goods, generating a similar response from Beijing.

ZTE is one of the world's biggest telecommunications equipment makers.

For critics worrying about a trade war between Washington and Beijing, the president added a bit of advice - "But be cool, it will all work out!"

Representatives from both the US and China - which boast the world's largest economies, with nominal GDPs of almost $19.4 trillion and approximately $12 trillion, respectively - held trade talks in early May.

His advisers have launched official or unofficial trade discussions with numerous countries, and these talks are wrapped in uncertainty because it is unclear whether Trump will follow through on promises to impose tariffs, even if they might raise prices for USA consumers.

In an April 16th statement, commerce secretary Wilbur Ross said ZTE made false statements to the USA government and "covered up the fact" that the company paid full bonuses to employees that had engaged in illegal conduct.

Meanwhile, ZTE, which relies on USA firms for key smartphone components, including microchips from Qualcomm and glass from Corning, has said the US export ban is a massive disruption to its business and ZTE Chairman Yin Yimin called it unfair and unacceptable.

The company incited a seven-year moratorium on purchases from US suppliers for violating a 2017 sanctions settlement and then lying about it.

The denial order was initially imposed but automatically suspended in March previous year on the condition that ZTE adhere to a settlement agreement which included penalizing the senior officials responsible for the decision to contravene the Iran sanctions.

At the time, the company said it was still assessing the impact of being placed on the Commerce Department's blacklist.

It came two months after two Republican senators introduced legislation to block the USA government from buying or leasing telecommunications equipment from ZTE or Huawei [HWT.UL], citing concern the companies would use their access to spy on US officials.

Qualcomm last month said it expected lost sales to ZTE to lower its earnings by 3 cents per share in the current quarter.

As one of the world's largest telecom equipment makers, ZTE relied on U.S. companies for components.

While the USA and China have threatened each other with trade tariffs, Trump has insisted that relations between Washington and Beijing have never been better and he has been working closely with Xi in efforts to persuade North Korea to abandon its nuclear program. "They are not simply going to be able to resume business as usual".

The true cost of United States sanctions against ZTE is starting to emerge.

Trump's reversal could have a significant impact on shares of American optical components makers such as Acacia Communications and Oclaro which saw their stock prices fall when USA companies were banned from exporting goods to ZTE.

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