Last month, the US imposed a sales ban on Chinese telecoms firm ZTE, causing the company to fall into financial turmoil. Due to this putting too many jobs in China at risk, President Trump has now vowed to help the manufacturer to get “back into business.”
The US Department of Commerce imposed the seven-year ban on ZTE for breaking sanctions on sales to North Korea and Iran, preventing American companies such as Qualcomm and Dolby from supplying the manufacturer with chips and speakers. Considering Qualcomm accounts for a third of its business, this was a significant blow to the firm.
This came after US security officials had already expressed concerns surrounding the Chinese company potentially snooping on military personnel, resulting in an order imposed upon military-based retail outlets to stop ZTE devices being sold.
Alongside slashing its immediate profits and share value, the ban could potentially cost the company its Android license. Before Google had managed to come to a decision, however, ZTE had already announced the suspension of its major operations last week, with commercial operations continuing thanks to “sufficient cash” that the company maintained.
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
Featured image credit: Reuters
President Trump has now acknowledged how many jobs are at risk in China as a result of US action, tweeting out that he is in contact with the president of China to resolve the issue and ensure the survival of ZTE. Following up on this, Trump asserted that US and Chinese trade negotiations had improved.
Commerce Secretary Wilbur Ross has been instructed to “exercise his independent judgement, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE based on its facts,” according to White House spokeswoman Lindsay Walters, ensuring that the company doesn’t get a free pass for its past mistakes.
While a ZTE representative has cited this as a “highly unusual case” thanks to its transition from a “sanctions and export control case to a geopolitical one,” there have been a number of concerns surrounding Trump’s actions that seemingly forgo national security warnings in favour of jobs in another country.
KitGuru Says: As always, the matter is multifaceted and much more complicated than a company being punished for its mistakes. Still, if ZTE is ever found to be in breach of national security – which it has adamantly denied previously, this could spell disastrous consequences for Trump’s presidency.