- Trump’s ZTE deal that would save the company may not happen after all.
- Senators on both sides of the aisle introduced legislation that would block the deal.
- Since the language is tucked into a larger defense bill, Trump would have no choice but to pass it.
After it was exposed that ZTE violated U.S. trade embargoes and directly lied to officials about the conduct, the Commerce Department banned U.S. exports to the company as punishment. The ban would essentially cripple ZTE to the point of potential bankruptcy.
President Donald Trump, however, swooped in to save ZTE after negotiating with the Chinese government. The new punishment would require a restructuring of ZTE’s management, a $1 billion fine, and $400 million to be held in escrow as a deterrent for ZTE from violating laws again. It would hurt ZTE for sure, but keep the company in business.
But today, via The Wall Street Journal, Senate leaders on both sides of the aisle introduced legislation into a popular defense bill that would reimpose the original punishments on ZTE, overruling Trump’s deal. If it passes, Trump would be forced to sign the law himself, as he would be unable to separate the popular defense bill from the ZTE sanctions.
The defense-authorization bill is essentially a “must pass” measure that typically passes through Congress each year with support from both Republicans and Democrats. Since the bill has bi-partisan support, rules tucked into the bill’s language are much harder to prevent, even for the President.
To save his ZTE deal, Trump would have to veto the entire defense-authorization bill, which would go against his long-standing statements on the military and U.S. defense protocols. However, it wouldn’t be the first time the President chose the unexpected route.
We've come to expect the unexpected from Trump, but would he veto a defense bill just to save his ZTE deal?
Republican and Democratic senators who support the original ZTE punishments feel strongly that ZTE’s flagrant violations deserve the ultimate punishment, and not a “slap on the wrist” fine. Although $1.4 billion is not a small amount of money, it sets the stage for other companies to also violate trade laws under the assumption that, at worst, they’ll have to pay a hefty fine.
Senators in support of the original deal also think that it is unrealistic for U.S. officials to police ZTE’s future actions, as the Chinese company could still conduct improper business even under a watchful eye.
Sen. Marco Rubio (R., Fla.) said that Trump’s penalties on ZTE are “severe, I don’t think there’s any debate about that. For me, it was more than that.” Rubio supports the new language in the defense bill.
Senate Majority Leader Mitch McConnell (R., Ky.) said that passing the defense measure is at the top of his to-do list this week.