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The ban on ZTE is a pawn in the bigger US-China trade war

Published May 22nd, 2018 7:28PM EDT
ZTE Ban Reversal
Image: Fernandez/AP/REX/Shutterstock

Just as promised, the Trump administration is planning to reverse the ban on ZTE that forced the Chinese smartphone maker to announce a shutdown of its mobile operations.

It’s not a full pardon, however, as the US government did find ZTE in violation of a previous settlement. But by allowing ZTE to return to business as usual, the US is putting the trade war with China on hold. In return, the Chinese government agreed to cut auto tariffs.

A similar move on imported US agricultural goods may follow, and China may end up buying more American farm goods in the future, two sources revealed to Reuters .

There’s a “handshake deal” on ZTE between U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He. The US would drop the ban in exchange for the purchase of more US farm products, the report notes. China might also lift tariffs on agriculture goods, which it put up in response to US steel duties.

China will reduce auto import tariffs from 25% to 15% for most vehicles starting July 1st. Auto parts tariffs would drop from 10% to 6%, Reuters notes.

However, ZTE will still have to face “harsh” punishment that will include changes of management and board, and possibly a fine. That must be great news for ZTE, which would be allowed to use hardware and software from US companies including Qualcomm and Google. Under the terms of the seven-year ban, ZTE would have been unable to import Snapdragon chips or license Android.

ZTE has been a key factor in negotiations, as the ban exposed China’s heavy reliance on crucial tech imports from the US.

The final deal is likely to be finalized before or during U.S. Commerce Secretary Wilbur Ross’s planned trip to Beijing next week.

Not everybody is happy about the outcome, and Republican Senator Marco Rubio is one of the most vocal critics of Trump’s decision to save ZTE.

“If this is true, then administration has surrendered to #China on #ZTE,” Rubio said on Twitter, liking to a The Wall Street Journal. Making changes to their board and a fine won’t stop them from spying and stealing from us. But this is too important to be over. We will begin working on veto-proof congressional action.”

Chris Smith Senior Writer

Chris Smith has been covering consumer electronics ever since the iPhone revolutionized the industry in 2008. When he’s not writing about the most recent tech news for BGR, he brings his entertainment expertise to Marvel’s Cinematic Universe and other blockbuster franchises.

Outside of work, you’ll catch him streaming almost every new movie and TV show release as soon as it's available.