The US Senate has voted 85 to 10 in favour to reinstate penalties on ZTE, despite President Trump’s attempts to ease pressure on the business and effectively save it from extinction.
The move from Trump could be viewed as an olive branch to ease growing tensions between the US and China, some of which can be attributed back to the President itself, though this bipartisan vote effectively side-roads any recovery efforts. The Bill will have to be reconciled with another bill already passed by the House, though it does look like Trump’s grand plan to ease international tension between the US and China starting to unravel.
The measure was included in a wide-ranging Bill focused on national security, known as the National Defence Authorisation Act, was backed by Senators from both sides of the aisle, with Republican Senators Tom Cotton of Arkansas and Marco Rubio of Florida teaming up with Democrats such as Minority Leader Chuck Schumer of New York and Elizabeth Warren of Massachusetts. With the provision being heavily backed by both sides, the Senate faces a showdown with the White House at an uneasy time for international relations.
This news should hardly come as a huge surprise though. When Trump suggested he was keen to save ZTE, and also when the Commerce Department tabled the deal, politicians from both parties were keen to object. A question was asked of the President; how can a company which is a suspected threat to national security be let off the hook so easily? Little seems to have been done to ease concerns, and it would now seem Trump will be powerless to save the struggling vendor.
ZTE found itself in hot water after violating US trade sanctions on Iran and North Korea, before then being caught out lying to US officials. The original seven year ban on using US products, services and IP brought the vendor to the edge of extinction, forcing it to cease operations, though Trump’s call-to-action seemingly brought ZTE back onto the straight and narrow.
For those who feared the escalating trade war between the US and China, this could be considered one of the worst possible developments. Some might have viewed the move to save ZTE as a pragmatic decision to get on friendly terms with China, though the actions of the Senate may well throw the relationship back into disarray. With tariffs set to come into play on July 6, and an the imminent retaliation from China, the situation could be about to get a lot worse.