President Donald Trump said on Sunday that he had instructed the Commerce Department to help China telecommunication’s giant ZTE Corp “get back into business, fast,” a surprising reversal of U.S policy after a U.S. ban had forced the company to halt business operations.
The new policy, announced via Twitter, stunned many of Trump’s trade allies and critics, given the administration’s typically tough stance on trade with 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. Too many jobs in China lost. Commerce Department has been instructed to get it done!— Donald J. Trump (@realDonaldTrump) May 13, 2018
“Why is our president worried about how many jobs were lost in China? Why blink on this now?” one Commerce Department official said to Breitbart News.
The administration’s critics pounced on the reversal.
Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat. You should care more about our national security than Chinese jobs. https://t.co/7Ygh7805jg— Adam Schiff (@RepAdamSchiff) May 13, 2018
Chinese officials demanded that the U.S. make concessions to keep ZTE afloat as a prerequisite for broader trade negotiations, according to a Reuters report citing “sources briefed on the matter.”Last month the U.S. Commerce Department banned American companies from selling to ZTE for seven years after finding that the company had repeatedly violated a 2017 agreement entered into after the company was discovered to have illegally shipped goods to Iran and North Korea.
The Chinese gave the administration an ultimatum on ZTE earlier this month when U.S. officials were in Beijing earlier this month, saying they would cut off broader trade talks unless the U.S. backed off on the sanctions, according to a source familiar with the matter.
Faced with this demand, Trump decided to concede, this source said.
Reuters reports that this has led to frustration within the administration and U.S. business circles:
Within the Commerce Department, and in U.S. business circles, the U.S. penalty against ZTE was widely seen as based on clear evidence of a company knowingly flouting U.S. regulations — separate from the highly politicized trade row, the sources said.
But Trump’s reversal surprised and frustrated many U.S. officials, who had viewed the penalty on ZTE as final and not open to appeal, the sources said.
“Everyone has been explicitly saying this is not part of the trade conflict. And now the President has overtly linked it to the trade dispute for better or worse, and that is not good if you’re trying to maintain credibility,” the second source told Reuters.
Trump seemed to respond to the criticism a few hours later, imploring Americans to “be cool.”
China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries. But be cool, it will all work out!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
A delegation of trade officials are set to arrive in Washington, D.C. this week to continue trade talks.