The Commerce Department will lift a seven-year ban on ZTE's ability to buy American parts, which was imposed after the company violated USA sanctions and did business with Iran and North Korea.
ZTE was initially banned from buying products exported by American technology companies due to findings showing that it had been selling American technology to Iran and North Korea.
Fox News said Trump told them on Thursday that he had negotiated the $1.3 billion fine with Chinese President Xi Jinping in a phone call.
"The ZTE move was very surprising", said Nathan Sheets, chief economist at PGIM Fixed Income and former undersecretary for worldwide affairs at the Treasury Department under President Barack Obama. Additionally, a bipartisan group of senators has warned the administration not to "compromise lawful US enforcement actions against serial and pre-meditated violators of USA law, such as ZTE.". "This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi", Trump tweeted a day later.
ZTE, which is publicly traded but whose largest shareholder is a Chinese state-owned enterprise, agreed previous year to pay a almost $900 million penalty and open its books to a USA monitor for breaking a 2017 agreement after it was caught illegally shipping US goods to Iran and North Korea, in an investigation dating to the Obama administration. "If President Trump won't put our security before Chinese jobs, Congress will act on a bipartisan basis to stop him", said Maryland Democratic Senator Chris Van Hollen, the author of the Senate provision.
William Evanina, the acting director of the National Counterintelligence and Security Center, said at his May 15 confirmation hearing that he would not use a ZTE phone nor recommend that anyone in a sensitive position in government use one.
The administration could announce the deal as early as Friday, the Times reported. U.S. companies provide up to 30 percent of components used in ZTE's equipment. The U.S. and China are engaged in high-stakes talks on steel trade and intellectual property rights under the looming threat of punitive tariffs. "Simply a fine and changing board members would not protect America's economic or national security, and would be a huge victory for President Xi, and a dramatic retreat by President Trump".
Commerce Secretary Wilbur Ross is scheduled to travel to Beijing on June 2 for further discussions over China's aggressive push to challenge US technological dominance.
Schumer added: "Both parties in Congress should come together to stop this deal in its tracks".
"ZTE, the large Chinese phone company, buys a big percentage of individual parts from USA companies". John Cornyn (R-Tex.), wrote to top White House officials this week.