Trump Abandons ZTE Sales Ban to Republican Scorn

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The ban, for breaching terms of a settlement over sanction-breaking sales to Iran, has all but mothballed China's second-largest telecoms gear maker and become entangled in a trade dispute between the world's two largest economies.

As part of this agreement, China would eliminate tariffs that are now placed on goods imported from the United States, including agricultural products, and begin purchasing additional farm goods from the U.S.

President Donald Trump on Tuesday tempered expectations set by his own administration that the USA and China had reached a tentative agreement to resolve a bubbling trade dispute between the two countries.

There's a "handshake deal" on ZTE between U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He. Still, it appears that the United States is giving a fair amount to maintain goodwill in the negotiations. I dont like to talk about deals until theyre done.

Some White House officials blame poor coordination among the warring factions in Trump's economic team for the retreat, according to several people briefed on the matter.

In agriculture, China's state grain stockpiler Sinograin returned this week to the US soybean market for the first time since early April, two sources said.

The divisions are apparent in Trump's public actions.

Trump said Chinese President Xi Jinping asked him to look into the fate of ZTE after the firm said it had to shut its production because the USA banned sale of American-made components ZTE uses to manufacture an array of technology products until 2025.

Cementing China's role as the leading country for vehicle assembly will help Beijing move the economy toward more sophisticated industries that can provide well-paid jobs for an increasingly well-educated population.

China has been one of the top buyers of USA crude exports since Washington lifted a 40-year ban on shipments in late 2015.

US$50 billion in tariffs on Chinese goods are ready to be enacted at Trump's command
AP US$50 billion in tariffs on Chinese goods are ready to be enacted at Trump's command

However, ZTE will still have to face "harsh" punishment that will include changes of management and board, and possibly a fine.

Senator Marco Rubio claims the Trump administration "surrendered" to China, adding that he will push Congress to block any possible deal between ZTE and the U.S. with "veto-proof" congressional action. He is threatening "veto-proof congressional action" to keep the sanctions in place. I think we'll get those conditions. But this is too important to be over.

Amid trade tensions between China and the United States in recent months, the USA side has criticized Beijing's excessive tariffs on automobiles that put U.S. automakers in a disadvantaged position.

Chinese officials had viewed the US punishment as an attack exposing their country's dependence on imports of key technologies.

Larry Kudlow, Trump's top economic adviser, said on Sunday that management changes at ZTE would be among remedies needed before the USA would consider a reprieve.

During recent negotiations, President Xi Jinping offered to cut the rate to 15 percent from 25 percent. As the Financial Times' Lucy Hornby points out, these developments would be at odds with Trump's goal of reducing our goods trade deficit with China.

He said it was a punishment "in name only" and warned the president against taking a softer stance on ZTE in exchange for promises of increased Chinese purchases of U.S. goods.

"The president will not back down until we see meaningful and lasting change", the White House added.

Negotiations over the North American Free Trade Agreement show the same tendency.

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