Trump offers surprise relief to Chinese firm
President Trump unexpectedly softened his position on trade negotiations with China this week by pledging to save a major Chinese telecommunications firm from crippling U.S. sanctions. In an about-face that stunned even his own advisers, Trump tweeted that he had ordered the Commerce Department to help Chinese smartphone maker ZTE “get back into business fast,” saying that its failure would cost “too many jobs in China.” In 2017, the Commerce Department fined ZTE $1.2 billion for selling electronics to Iran and North Korea, in violation of U.S. sanctions, and last month barred U.S. technology firms from selling parts to the company for seven years. Unable to find alternative suppliers, ZTE, which employs 75,000 people, began to shutter its operations last week.
U.S. trade negotiators are now reportedly working with their Chinese counterparts on a deal that would relieve the penalties against ZTE in exchange for Beijing removing tariffs on billions of dollars of American agricultural products. Even so, U.S. lawmakers from both parties criticized Trump’s surprise concession, saying his move could undermine the U.S. negotiating position, as well as national security. U.S. intelligence officials have warned that ZTE phones and modems could be used by the Chinese government to spy on Americans. Trump defended his decision, saying it was in the country’s best interest because U.S. suppliers would otherwise lose ZTE’s business. “This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi,” the president tweeted.
“It now seems to be dawning on Donald Trump that trade wars are neither good nor easy to win,” said Jordan Weissmann in Slate.com. Trump knows he has to de-escalate tensions with China because he needs Beijing’s help in upcoming nuclear negotiations with North Korea. Relaxing sanctions on ZTE is a prerequisite for China’s engagement. “If you’re a glass-half-full kind of person, you could look at this and see a president capable of learning.”
But this “particular quid pro quo sets a dangerous precedent,” said David Fickling in Bloomberg.com. The penalties on ZTE weren’t meant to be a negotiating chip: The company broke the law by violating American sanctions and then lying about it. Allowing Beijing to essentially buy a “get-out-of-jail-free card” sends a terrible message. “Any government entangled in a dispute with Washington now knows that it need only threaten the Trump-voting farm belt to get off the hook.”
“Something fishy is happening,” said Matthew Yglesias in Vox.com. The president just surrendered one of his biggest sources of trade leverage against the Chinese, “with no explanation, no background briefing, and seemingly no consultation with the relevant officials.” Two days before he “flip-flopped,” however, a Chinese state-owned company approved a $500 million loan to Indonesian developers for a Trump-branded resort outside Jakarta. “Under normal political circumstances,” it would be outlandish to suggest the president is being bribed by a foreign country for his own personal gain. But in 2018, nothing is normal.