That means no Qualcomm chips or Android software for its phones, and no American chips or other components for its cellular gear. Analysts estimate that four-fifths of ZTE’s products have American companies. ZTE went into a tailspin, saying last month that it had shut down major operations.
Why Did Trump Intervene?
The American president hasn’t explained his decision to try to help the company, other than to cite the potential for lots of Chinese workers to lose their jobs. But ZTE’s troubles come at a complicated moment.
In normal times, the company’s fate would be a legal matter for the Commerce Department. But the Trump administration is pressuring China to make trade concessions. It may also need Beijing’s help to strike a deal with North Korea as Washington and Pyongyang plan a high-profile meeting on June 12 in Singapore.
Mr. Trump appears to be using ZTE’s punishment as a bargaining chip in negotiations with China, rather than a matter of law enforcement. It isn’t clear what he will get in return for allowing ZTE to remain in business.
[JIM STEWART’S TAKE: Trump might cave to China because of Iowa’s soybean farmers]
What Are the Terms of the Deal?
According to Mr. Ross, who announced the deal to end the American sanctions on Thursday morning on CNBC:
■ ZTE must pay a $1 billion fine plus $400 million in escrow to cover “any future violations.”
■ ZTE must allow a compliance team, chosen by the United States, to monitor the company.
■ ZTE must also change its board of directors and executive team within 30 days.
Some Lawmakers Would Like to Block the Deal. Can They?
Some members of Congress, Republicans and Democrats, say that absolving ZTE of its misdeeds runs counter to national security interests. It is unclear, however, whether their efforts to block Mr. Trump’s moves regarding ZTE will be successful.