Trump's ZTE Reversal May Signal Shift in China Trade Talks

May 14, 2018

By Alisha Haridasani

President Trump's reversal on how to deal with the Chinese electronics maker ZTE could signal a shift in trade talks before American and Chinese officials were to meet Tuesday for a second round of negotiations.

China reportedly welcomed Trump’s decision to try to help ZTE "get back into business, fast," weeks after the U.S. slapped the electronics company with crippling sanctions. The Chinese Ministry of Foreign Affairs said Monday the government is “maintaining close communication with the U.S. on the implementation of specific details.”

"If both countries are working together, there's less of a probability that this could evolve into some sort of a trade war," said Anthony Chan, chief economist at Chase.

Trump tweeted on Sunday that he and President Xi Jinping of China were working together, and Trump instructed the Commerce Department to help ZTE. "Too many jobs in China lost," he said on Twitter. "Commerce Department has been instructed to get it done!"

Last month, the U.S. blocked American companies from doing business with ZTE because the electronics company allegedly violated sanctions against Iran and North Korea. ZTE, which makes mobile phones, relies heavily on components created by American companies in its products. The crackdown forced the company to shut down most of its operations last week.

Following Trump’s tweet, the White House issued an official statement saying Secretary of Commerce Wilbur Ross will, “exercise his independent judgement, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE.”

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