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Congress to Trump: Don’t go soft on China’s ZTE

June 19, 2018

President Donald Trump is threatening China with another $200 billion of trade tariffs while trying to save one of its biggest telecom firms. 
 
The news: Politico reports that the US Senate has passed a defense spending bill that imposes new conditions on Chinese telecom giant ZTE, including one that says civil penalties it faces in America can’t be lifted for at least a year while its behavior is monitored. The bill is supported by senators on both sides of the aisle, including Republicans Marco Rubio and Tom Cotton and Democrats Chuck Schumer and Elizabeth Warren. 
 
On hold: In April, the US Commerce Department banned US companies from doing business with ZTE for seven years after it was caught violating sanctions by trading with North Korea and Iran. The firm, which uses lots of US components, seemed in dire straits until the Trump administration brokered a deal to lift the ban in return for a $1 billion fine and other measures.
 
Why this matters: ZTE has become a pawn in both trade negotiations and national security tensions. In addition to maintaining penalties, the Senate bill would also bar US government agencies from buying gear from ZTE and Huawei, another big Chinese telco. The House is also considering legislation that would punish ZTE. Whatever happens next, China may look to build up its domestic chip industry even faster so its firms aren’t dependent on US ones or other foreign manufacturers that might be overcharging for their silicon.

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