• Trump Displays The Art Of The Deal With China And The ZTE Negotiations

    Today, President Donald J. Trump pulled a rabbit out of a hat with a confusing trade issue. He expressed his views and our direction on the now controversial issue relating to the Chinese telecommunications company ZTE. President Trump seems to have threaded the needle in an appropriate way that both preserves punishment on the company while dialing back an order that went far beyond reason. ZTE was wrapped up in the trade conflict between the United States and China in a way that hurt American jobs and punished American consumers in an unfair manner.

    President Trump handled this dispute very well. The Wall Street Journal reports that

    “the U.S. and China have agreed on the broad outline of a deal that would save imperiled Chinese telecom giant ZTE Corp., according to people with knowledge of the matter in both countries, as the two sides move closer to resolving their trade dispute.”

    Last year the company ZTE was handed a severe punishment by the Administration when they were fined over one billion dollars for reporting violations. The punishment seems to be measured and not a complete ban on all American interaction with the company.

    This agreement sets the table for a broad rebalancing of trade relations with China.

    The problem with the initial order by the Department of Commerce was that they issued a “denial order of export privileges” that hit, according to Reuters,

    “U.S. companies are estimated to provide 25 percent to 30 percent of the components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.”

    The U.S. companies harmed by the order include Qualcomm (microchips), Corning (glass), Google, Texas Instruments, and GlobalFoundries. Also according to Reuters, ZTE is the “4th largest supplier of smartphones in the U.S. accounting for approximately 10% of the market.” It was wise to dial this order back because of the large impact on American business and consumers.

    Bloomberg reported that the agreement “of a settlement to the seven-year ban on ZTE Corp. buying American technology, ending a punishment that threatened to put the company out of business” and “the details are still being worked out but would include major changes to management, the board and potentially significant fines, the newspaper (WSJ) said Tuesday, citing unidentified people familiar with the matter.” Reports indicate that the order had halted major operations resulting in a communication between Chinese President Xi Jinping and President Trump to resolve the matter.

    It appears that this is an example of President Trump’s tough talk working, because he has helped to both leverage a better agreement while saving American jobs. The company paid a hefty fine, then violated part of the agreement after they were found to have violated trade sanctions with Iran. They halted sales to the rogue nation, but erroneously did not sanction employees involved in the violation of sanctions. The company reported the violation to Commerce, then the Department imposed the harshest penalty possible by ceasing all U.S. companies from dealing with ZTE. That order has been changed in a way that will preserve harsh punishment while lifting the complete ban on the company doing any business in the U.S.

    An America first trade policy is important, and President Trump has used his leverage to secure better agreements. The ZTE example shows that tough talk and tough actions will leverage better trade agreements. President Trump’s hands on approach to settling this matter both put American interests first while making sure that American companies and consumers were not harmed by a Department of Commerce order that went too far.

    S.C. Sherman

    Senior Editor

    Steve Sherman is an author, popular radio commentator, and former Iowa House candidate. His articles have appeared nationally in both print and online for Townhall, Human Events, Clash Daily, Washington Times, Washington Examiner, Red Alert Politics, Forbes, NRATV and others. All of his novels including his most recent tome, Lone Wolf Canyon, a modern day western that infuriates the left and all "Snowflakes," are available here.

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