DON’S GRAND PLAN
ZTE change part of overall strategy
President Trump on Monday said his decision to go to bat for Chinese smartphone maker ZTE was part of an overall strategy to work out a trade deal with China.
Hope that the White House’s surprise change in tack on ZTE could result in China backing off its threat to place a 25 percent tariff on US soybeans buoyed investors, sending the price of soybean futures up nearly 2 percent on Monday.
Under the threat of a tariff, China had cut its purchases of soybeans in April. It is important for US farmers to get Beijing to drop its threatened tariff and increase purchases before the key late-summer buying season begins.
Even before the tariffs threatened to cut demand — and prices — net farm income in 2018 was projected to hit a 12-year low, according to the Agriculture Department.
Washington insiders also said Monday that ZTE could be used as a pawn in trying to calm China ahead of next month’s summit between Trump and North Korea’s Kim Jong-un.
Trump’s change of heart on ZTE — announced in a tweet on Sunday — stands in sharp contrast to the sevenyear ban the president’s Commerce Department put on ZTE and its crucial purchases of parts from US suppliers just last month.
That ban crippled ZTE, the No. 2 smartphone maker in China, and it recently shut down its US operation. Its Shenzhen headquarters were also feeling some pain.
Washington found that ZTE illegally shipped goods to Iran and North Korea — and then misled US authorities on whether a key executive connected to those deals received a bonus.
Trump doubled down on the move to protect Chinese jobs Monday afternoon, tweeting that ZTE “buys a big percentage of individual parts from US companies.”
“This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi,” Trump added.
The concession comes just days before Trump administration officials are expected to meet with Chinese Vice Premier Liu He to discuss trade negotiations.
Commerce Secretary Wilbur Ross told journalists during an address at the National Press Club in Washington on Monday that his department is exploring ways to punish ZTE for flouting US sanctions without completely crippling the company.
“ZTE did do some inappropriate things. They’ve admitted to that,” Ross said. “The question is: Are there alternative remedies to the one that we had originally put forward? And that’s the area we will be exploring very, very promptly.”
Paul Triolo, an analyst at Eurasia Group, wrote in a note that Trump has no qualms about using ZTE as a bargaining chip.
“The change in policy on ZTE on Sunday was clearly driven by Trump himself and likely to avoid a blow-up with China on a matter he considers of secondary importance to trade negotiations,” he wrote.
Trump’s change of tack prompted some Democrats to slam the president for caring more about jobs in China than in the US.