ZTE Back From the Dead After Trump Reverses Sanctions

Trump says in a Tweet that he is working with the Chinese president to keep struggling company ZTE in business.

Chinese frm ZTE may be back from the dead after Trump Extends Lifeline to the sanctioned tech company.

Mr. Trump said in a Sunday tweet that the Commerce Department—which is reviewing ZTE’s request for a stay of an order banning American companies from selling to the Shenzhen-based firm—has been instructed to “get it done.” Mr. Trump added: “Too many jobs in China lost.”

The surprise intervention comes less than a month after ZTE was hit the ban. The Commerce Department ordered U.S. companies to stop exporting to ZTE in mid-April, saying the Chinese company violated the terms of a 2017 settlement resolving actions for its evasion of U.S. sanctions for earlier selling to Iran.

ZTE, which relies on billions of dollars in component imports from U.S. tech titans such as Qualcomm Inc. QCOM and Intel Corp. INTC has warned the ban threatened its survival. Last week, the company said it had ceased major business operations.

Trade War Cost US Firms

Ending the sanctions is not just for the benefit of China.

Reuters notes ZTE paid over $2.3 billion to 211 U.S. exporters in 2017.

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

Lose-Lose Never a Winning Strategy

No one wins trade wars. And sanctions inevitably backfire.

Chinese firms lost more than US firms with ZTE sanctions, but lose-lose is never a winning strategy.

Mike "Mish" Shedlock

Comments (9)
No. 1-9
AWC
AWC

So, we have a president that is picking corporate winners and losers on an international scale? Anyone else see the problem with that?

Mike Mish Shedlock
Mike Mish Shedlock

Editor

Well, yes. And please note that he wants a $16 minimum wage in Mexico, but not the US!

Kinuachdrach
Kinuachdrach

Look at the bigger picture. President Trump, in a brilliant move, showed the Chinese government that the US has the power to cause them real pain if the Chinese continue the two-decades long trade war they have been waging against the US and the world.

And now, in a move reminiscent of Machiavelli, he offers a helping hand to a bloodied foe. The US would rather be a partner than a victor.

It is easy to predict that the next move will be a set of serious discussions aimed at steps towards ending China's one-sided mercantilism -- discussions that China will now be more likely to want to succeed. Free traders who are not blinded by Trump Derangement Syndrome are applauding and wishing the President success in working towards fair trade as a step on the road to free trade.

And, yes, every battle involves damage and losses to both sides. But refusing to fight the Chinese trade war (as the US has done for two decades) has resulted in losses only to the US side.

Greggg
Greggg

IOW, this is as close to a free market as we get. BTW, people are buying out ZTE phones as big collector items right now, figuring they are going to become rar
e and valuable.

thimk
thimk

The tariffs were suspended because china subdued "rocketman" not the US. Using tariffs for political leverage unrelated to "trade"is a dangerous precedent. Chicken hawk Bolton is alluding to placing sanctions on EU firms doing business with IRAN.