Trump's ZTE deal that would save the company may not happen after all. The amendment also bans USA government agencies from buying or leasing equipment from ZTE and its Chinese rival, Huawei, and bars US loans to the companies. The ban would essentially cripple ZTE to the point of potential bankruptcy.
Trump has said he reviewed the penalties as a personal favor to Chinese President Xi Jinping. The new punishment would require a restructuring of ZTE's management, a $1 billion fine, and $400 million to be held in escrow as a deterrent for ZTE from violating laws again.
A bipartisan group of U.S. senators has agreed to include an amendment in the annual defence bill that would reverse the Trump administration's deal that saved Chinese telecommunications giant ZTE Corp from the brink of collapse. Then the full bill will have to pass, and be merged with a version that passed the House earlier this year.
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Trump had said the ZTE deal was a precursor to any broader US-China trade negotiations. It's a stunning turnaround, though it had been signalled for some weeks.
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Trump just a week before the summit imposed 25% tariffs on steel and 10% tariffs on aluminum from the European Union and Canada. The criticism was echoed by White House economic adviser Larry Kudlow, who joined Trump at the G7 meetings .
Republican and Democratic lawmakers introduced the legislation last week and said they hoped the Senate would consider it as part of the NDAA, legislation Congress passes every year.
They were even more surprised that the leniency came on ZTE. A bipartisan amendment has been added to the upcoming "must-pass" National Defense Authorization Act, one that would put the ban back into place. However, it wouldn't be the first time the President chose the unexpected route. In early June, the White House announced ZTE would be able to resume buying US parts after it agreed to pay a $1 billion fine and submit to USA oversight.
In February, U.S. intelligence officials warned Americans not to use smartphones made by ZTE or Huawei - another Chinese telecom company - as the communication technology could be compromised "to gain positions of power inside our telecommunication networks that provides the capacity to exert pressure or control over our telecommunications infrastructure". After all, a Congressional report from 2012 called ZTE and Huawei threats to USA national security.
Sen. Marco Rubio (R., Fla.) said that Trump's penalties on ZTE are "severe, I don't think there's any debate about that". Rubio supports the new language in the defense bill.
Senate Majority Leader Mitch McConnell (R., Ky.) said that passing the defense measure is at the top of his to-do list this week.