US President Trump has done a volte face on the issue of China’s ZTE trade embargo. He tweeted on Sunday directing his Commerce Department to go easy on them.
ZTE, China’s major phone company was seriously affected by the tough US trade sanctions imposed against it recently. The sanctions were imposed because the company which relies heavily on US imports for its operations continued its unlawful selling of items to North Korea and Iran. However, President Trump seems to have hit upon a brainwave of leveraging the sanctions against the company for obtaining several concessions in trade with China. The tweet set many officials to comment about the likelihood of a mini-deal happening between the two countries on this issue. However, much as people may think, it is not going to be a smooth sailing for President Trump. An irate President Xi of China, guided by his foremost economic advisor has asked for the lifting of the seven year embargo on the phone company before proceeding further.
Against the backdrop of a stand-off between the two countries on the ZTE embargo issue, the President’s changed stance on Sunday has caught all economic advisors in the US administration by unaware. But such a direct interference of the US President in matters of law enforcement is going to set a wrong precedent according to an unnamed senior official of the Obama administration. Trump’s wavering economic policies on US sanctions and export control laws does not forebode good for the country.
The tensions between the US and China had reached escalated levels a few weeks ago causing financial markets to tremble under the possibility of a severe trade war between the two. However, the economies of the two countries are so intricately interdependent on one another that none of them can afford to do without the other. After the Sunday’s tweet, President Trump has given an assurance of things getting sorted out between them.
Will a compromise on the ZTE issue be achieved? The next few days will tell!
Morgan has been in the position of the business analyst for almost a decade and with such expertise, he is one of the best expert hands with us. His profound understanding of the trade, commerce, and business trends makes him a reliable contributor to blamfluie.com.