March 24, 2023

The Senate Banking Committee just threw a major wrench into Trump’s Chinese corruption scheme

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In a rare bipartisan move, Republicans on the Senate Banking Committee today joined with Democrats to overwhelmingly pass an amendment that blocks President Trump’s ability to cut a deal that would ease sanctions on ZTE, the Chinese state-controlled telecom firm that some government officials believe poses a risk to national security. 

The vote was 23 to 2 to block Trump from easing sanctions on ZTE without first certifying to Congress that the Chinese company – which government investigators found lied to investigators about its business with Iran and North Korea – is in compliance with U.S. law.

“If the president and his team won’t follow through on tough sanctions against ZTE,”  Senate Minority Leader Charles Schumer (D-N.Y.) said in a statement, “it’s up to Congress to ensure that it happens.” 

The amendment put forward by Sen. Chris Van Hollen (D-MD) is attached to a bill that would give regulators more authority to block foreign investment in the U.S. under certain circumstances.

The Senate’s action is likely to throw a monkey wrench into the Trump administration’s already confusing plans to work out a complicated trade deal with China that is supposed to address the huge annual trade imbalance between the two countries.

As it is, Trump and his administration seem to be at odds with what is happening, with the president saying the fate of ZTE is part of the discussion while others in his administration, including Treasury Secretary Steven Mnuchin, are saying it is an enforcement issue and that the telecom company’s problems are not  even on the table.

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Trump, however, keeps coming back to the need for a deal with the Chinese, who appear to be insisting that the ZTE problems be solved as part of any agreement.

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After the Trump administration found ZTE was violating sanctions by selling to North Korea and Iran, sanctions were imposed that blocked sales by U.S. companies that supply many of the components used by the Chinese company.

That effectively put ZTE out of business.

After Chinese President Xi Jinping asked Trump to look at the situation surrounding ZTE again, the president directed the Commerce Department to look at how it could help put the Chinese company back in business.

The Wall Street Journal had reported this morning that Trump was close to a deal that would include a billion dollar fine against ZTE, force the company to make management changes and require China to reverse billions of dollars in tariffs on U.S. agricultural products, opening the door for American farmers to sell to China again.

During a press conference tied to the visit to Washington of South Korean President Moon Jae-in, Trump denied the Journal report that there is a deal, and said, “we’ll see what happens.”

Trump has been scrambling to look like he is being tough on China in the trade talks since reports surfaced around May 15 that Trump’s sudden reversal of U.S. policy, lifting sanctions on ZTE at the time, was driven by a Chinese loans of at least $500 million in an Indonesian theme park project that includes Trump-branded hotels, residences, and a golf course.

Trump denied there was any quid pro quo, but considering the past mixing of his government role, his personal business and his willingness to do things to help his family company, there is still a lot of skepticism.

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Trump now says that he is trying to help ZTE as a personal favor to the Chinese president,

As usual just what Trump is really doing -and why – is impossible to know, which is why even Republicans in Congress have voted for a bill that will require the president to justify his actions concerning the big telecom company. 

Since his days on the campaign trail, Trump has railed against the huge trade deficit the U.S. has with China, well over $300 billion last year, and promised to take action to shrink that amount.

However, his actions recently have seemed more like words than real concrete actions with many believing the Chinese are going to get the best of the president on this deal.

Whether that is because of secret backroom deals or Trump really is not the great negotiator he claims to be, it is once again back news for the American people,

Benjamin Locke

Benjamin Locke is a retired college professor with an undergraduate degree in Industrial Labor and Relations from Cornell University and an MBA from the European School of Management.

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