Trump tweet gives ZTE a lifeline
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In an unexpected backflip, US President Donald Trump has tweeted that he will be working with his administration to get ZTE back in business as soon as possible. ZTE recently announced that it had halted all operations as it sought relief from a US ban on the Chinese smartphone maker buying vital components from US companies like Qualcomm and Intel. If implemented as had been planned, the ban would have almost certainly put ZTE out of business.
After speaking with China's President Xi Jinping, Trump tweeted:
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!
While the news is good for ZTE and its employees, it is completely unexpected. The Trump Administration's has accused China of unfair trade practices and recently introduced large tariffs on Chinese steel imports, sparking fears of a trade war between the two global titans. ZTE received its ban after the US says it had been caught selling its products to Iran, in direct violation of the terms of sale of its US-sourced components. Both ZTE and Huawei have also been accused by the US government of using malware to spy on behalf of the Chinese government, and the Pentagon recently issued an order banning the sale of ZTE and Huawei devices from stores located on US military bases around the globe.
Before President Trump's tweet, ZTE had indicated it would challenge the Commerce Department's decision in the courts. Were the ban to remain in place, it would have prohibited ZTE from purchasing components from US companies for 7 years. There are suggestions that what might have influenced the Trump Administration's back down on ZTE is the important role that China will play in the upcoming meeting between President Trump and North Korean leader Kim Jong-un. A positive meeting between the two leaders could be a signature achievement of the Trump administration and clearly supersedes its "America First" rhetoric.