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We now know why Trump suddenly reversed course on sanctions against a
Chinese tech giant
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. |