None of you, Trump told the lawmakers, had even heard of ZTE before the most recent flap.
The lawmakers had indeed heard of ZTE. Several had spent years pushing action against what they viewed as unpardonable abuses by a company found guilty of selling U.S. goods to Iran — only to watch Trump sweep aside their concerns in a quick deal done with Chinese President Xi Jinping.
Now GOP senators, who have generally stood down rather than challenge Trump even when they disagree, have a window to take action. But it will require them not only to thumb their nose at a president who is wildly popular with GOP voters but also to reach a deal with the reluctant House.
Adding to that pressure is new evidence that ZTE may be flouting the terms of the deal — sparking fresh protests from lawmakers who will have to decide in coming weeks whether to bow to White House demands and back down on punishing the company.
The White House on Monday took concrete steps to begin helping ZTE. The Commerce Department issued a waiver allowing U.S. businesses to continue doing business with ZTE for one month without penalty as negotiations continue. That also could give the White House more time to work out a resolution with members of Congress.
“So this is the great deal we have on #ZTE? They replace board members with new directors handpicked by the controlling shareholder who in turn is backed & controlled by the #China government. Why are we allowing them to continue to play us like this?” Sen. Marco Rubio (R-Fla.) wrote on Twitter after the Wall Street Journal reported that new board members installed as a condition of the deal also had ties to the Chinese state.
Rubio is among the Republicans who led a rare legislative rebuke of Trump last month, when senators included a provision in an annual defense bill reimposing the Commerce Department penalties on ZTE that Trump had lifted at Xi’s request.
The defense bill — which sets out policy priorities for the Pentagon on a wide sweep of issues — could be painful for Trump to veto. And it passed the Senate with a veto-proof majority.
The House earlier passed its own version of the bill. But although the House and Senate versions of the National Defense Authorization Act include a ban on the U.S. government’s doing business with ZTE, the House version does not reimpose the Commerce penalties.
The White House supports the House version of the legislation, and when lawmakers meet after the Fourth of July recess to reach a final, compromise version, senators will be under pressure to cave.
“We’ve made clear to them what we think needs to happen,” White House legislative director Marc Short told reporters on Capitol Hill last week, while declining to say whether Trump would veto the defense bill if the Senate language is retained.
“We’ve made clear that the sanctions against ZTE were the most stringent against any private company that I think have ever been imposed, not just in the size of a financial penalty but also removing the entire board and putting in our discretion and compliance team,” Short said. “So we are more comfortable, clearly, with the House language that was passed.”
It is all taking place amid rising threats of a trade war, as the United States prepares to impose tariffs on China that are certain to spark retaliatory tariffs in return. Republican lawmakers are also increasingly concerned about Trump’s broader trade policy, though legislation by Sens. Bob Corker (R-Tenn.) and Patrick J. Toomey (R-Pa.) to give Congress veto power over certain tariffs has yet to get a vote.
ZTE stands out as the rare case in which GOP lawmakers have passed legislation rejecting a Trump initiative. It remains to be seen whether they hold firm in the face of the president’s objections.
ZTE had been accused of making illegal shipments of U.S. goods to Iran and North Korea in defiance of U.S. sanctions and lying about its response, and the Commerce Department announced in April that the Chinese company would be banned for seven years from buying American technology, something that threatened to put ZTE out of business.
Trump took GOP lawmakers and members of his own administration by surprise the following month when he announced that he was working with Xi to get ZTE back into business, proclaiming over Twitter, “Too many jobs in China lost.”
The result was a tidal wave of bipartisan criticism that the White House was unable to stop before senators had responded by writing the defense bill language reimposing the Commerce Department penalties. Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin were dispatched to Capitol Hill to try to explain the administration’s position, but by the time they arrived, senators were already moving forward with the legislation, and the meeting went poorly, said one of the senior administration officials and a Capitol Hill aide, who also spoke on the condition of anonymity to discuss the private meeting.
In lieu of the “denial order” that would prevent ZTE from buying U.S. products from companies such as the chipmaker Qualcomm, the Trump administration announced plans to require ZTE to pay a large fine, replace its entire board of directors and fund a new in-house compliance team staffed by U.S. experts. Rubio and other senators viewed that as little more than a slap on the wrist.
The dispute has divided Trump from one of his top allies in Congress, Sen. Tom Cotton (R-Ark.), who wrote the ZTE language in the defense bill along with Rubio and Democratic Sens. Charles E. Schumer (N.Y.) and Chris Van Hollen (Md.). Cotton, a national security hawk who sits on the Senate Intelligence Committee with Rubio, declared repeatedly on the Senate floor last month that ZTE deserved the equivalent of the “death penalty” for its actions.
But in an interview, he played down the suggestion that his support for stringent action against ZTE puts him at odds with Trump.
“What he’s proposed has substantially changed the status quo from where it was for eight years. I simply would like to go a little bit further,” Cotton said in an interview. “I wouldn’t say that’s at odds; I would say that’s working together to try to address a threat to our national security.”
House Republicans view their version of the defense bill as a sufficient response to ZTE. “I’m for the House position, but it’ll have to be negotiated out,” House Armed Services Committee Chairman Mac Thornberry (R-Tex.) said last week. There has been talk of a compromise, but it is unclear whether one will emerge or what it would entail.
Underscoring the singularity of the ZTE case, the Commerce Department on Monday denied an application by another Chinese telecom firm, China Mobile, for a license to offer telecommunications services between the United States and international locations. The Commerce Department’s filing dwelt on the Chinese government’s extensive efforts at national-security and economic espionage against the United States.