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- President Donald Trump’s decision to reverse sanctions on Chinese telecom giant ZTE was part of a larger trade agreement, according to a new report.
- In exchange for easing the restrictions on ZTE, the Chinese government will not impose tariffs on US agricultural products like pork and wine.
- The agricultural tariffs were imposed by China in response to Trump’s steel and aluminum tariffs.
- The deal is not finalized yet and details still need to be worked out.
President Donald Trump’s stunning tweet suggesting that the US would rescind sanctions against Chinese telecom giant ZTE appears to be part of a larger deal to try and protect US farmers, according to a new report.
The Wall Street Journal reported Monday that in exchange for the removal of sanctions on ZTE, China plans to drop tariffs on a slew of US agricultural products including pork.
The deal may not go through, according to The Journal, and details are still being worked out. But, the existence of such an agreement would explain Trump’s Sunday tweet in which the president suddenly reversed course on US penalties against ZTE.
“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” Trump said. “Too many jobs in China lost. Commerce Department has been instructed to get it done!”
The Commerce Department hit ZTE with sanctions after the Chinese firm continued to do business in Iran and North Korea, a violation of US rules. ZTE was not allowed access to US-made parts for its phones and equipment, which cropped the company’s operations.
In a follow-up tweet on Monday, Trump said the ZTE decision was part of a broader negotiation with China on trade.
“ZTE, the large Chinese phone company, buys a big percentage of individual parts from US companies,” Trump said. “This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi.”
Given ZTE’s importance to the Chinese economy, China sought to convince the Trump administration to reverse the move.
In return for ZTE sanction turnaround, the Chinese government reportedly will not impose tariffs on US agricultural products that were announced as a response to Trump’s steel and aluminum tariffs. Those tariffs applied to a wide variety of goods including pork, apples, and wine.
The Chinese may also make it easier for other US agricultural products to enter the country in addition to the tariff relief, The Journal reported.
During a talk at the National Press Club on Monday, Commerce Secretary Wilbur Ross said that the ZTE sanctions will be part of talks when China’s top economic adviser Liu He comes to Washington, DC, in the next few weeks and the US is trying to a “fair deal.”
But, Ross also said the sanctions were not trade actions but rather a national security issue.
“Our position has been that is an enforcement action separate from trade,” Ross said.
While the deal is not a comprehensive measure, any agreement would be a step towards decreasing recent trade tensions between the US and China.