Trump’s ZTE Flip-Flop Puts Chinese Phone Makers on Notice
The U.S.’s trade threats encourage them to seek alternatives to American tech.
Trump-proof products?
Photograph: Bloomberg
Despite President Donald Trump’s recent promise to make it possible for ZTE, the Chinese telecommunications equipment manufacturer, to import U.S. components and technology again, the fracas was a giant red alert to ZTE’s industry peers: If their supply chains include U.S. firms, they aren’t safe from adverse surprises. Trump shouldn’t be surprised if these firms begin taking defensive action that hurts American commercial interests. Of course, they won’t find it easy to do that.
It would be hard for Chinese manufacturers not to be alarmed. The U.S. doesn’t just pursue foreign companies for alleged violations of its sanctions against Iran and North Korea; in ZTE’s case, it demanded punishment for specific culpable employees, and failing to mete it out was one of the stated reasons for the seven-year ban on sourcing anything from U.S. firms. Even aside from Trump’s obvious use of the order to renegotiate trade terms with China, this is a level of meddling few companies are willing to allow. The Chinese government isn’t happy to live with this kind of vulnerability, either; in March, even before the ZTE ban was announced, it publicized a plan to raise $31.6 billion to invest in local chip companies so it could phase out some $200 billion in annual semiconductor imports.