Trump floats management changes instead of sanctions for China's ZTE

Trump floats management changes instead of sanctions for China's ZTE”

But much of that trade originates from companies whose headquarters are outside the U.S. BMW and Mercedes-Benz, for example, build cars in the be shipped to China.

Their reaction could complicate Trump's efforts to win concessions from China that would narrow a $335 billion annual trade gap.

Some White House officials said that vehement disagreements within Trump's trade team were to blame for the inconsistent messages.

"Both parties have come together today to strongly rebuke ZTE and the administration's soft approach", Schumer said, calling the amendment a "huge" move "in our fight against the Chinese, and we should pass this legislation on the floor immediately". You have to wonder whether the President actually cares whether ZTE is breaking the law or not; as long as the Chinese trade deficit is brought down, it doesn't really matter.

In return, China would eliminate tariffs on USA agriculture or agree to buy more farm products from the United States. ZTE's fate remains unknown as of now. But Trump may be the first leader ever to do it when the economy is booming.

The statement also promises "meaningful increases" in American agriculture and energy exports, resolving to hammer out the specifics in later discussions. He views the massive US trade deficit with China as evidence that Beijing is engaged in abusive trading practices and has outmaneuvered previous USA administrations. In all this, we do not know what part of Trump's dealings with Kim Jong Un are a side-scene, but as is evident, the twists and turns are theatrical.

Such concerns have dogged Trump since he took office. The Commerce Department announced on 16 April that the company would be cut off from its USA suppliers, crippling its business, for what Commerce Secretary Wilbur Ross called "egregious" violations of United States sanctions. ZTE has been fined in recent years for shipping American goods to five embargoed countries, including Iran and North Korea. Notwithstanding these sensitive matters, Mnuchin played a productive role by suggesting the rules be relaxed for the time being to stave off an economic war. In targeting ZTE, the U.S. discovered a weapon whose potency it was probably not aware of, and now it also has Huawei in its crosshairs, and this is something that is giving Beijing sleepless nights. In April, China announced a timetable to permit foreign automakers to own more than 50% of local ventures.

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Both sides are aiming for something more than just trade. Reducing the trade surplus would be relatively easier if the United States had opened its domestic market and allowed for more varied exports. Further, they demanded that China not use the WTO mechanism to delay action.

While President Trump remains hopeful the tentative deal will be one of the best things to happen to our nations farmers, China also has something to smile about. Either the United States would have to nearly stop buying entirely from China, something that would hurt American consumers.

In addition to ZTE, the ban would apply to several other Chinese companies, including Hytera Communications Corp., Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co.

The Europeans, too, are waking up to the challenge though somewhat late. "Given the complexity of these issues, the more sophisticated people realize this is going to be an ongoing and important struggle that's not going to be solved overnight".

This commentary originally appeared in Hindustan Times.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc.

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