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Trade War

US Senate showdown on Trump's ZTE deal set for Monday

Congress seeks to keep ban on Chinese phone company over White House objections

U.S. President Donald Trump has sought to use sanctions on ZTE as leverage in trade talks with Chinese counterpart Xi Jinping.   © Reuters

WASHINGTON -- The U.S. Senate is scheduled to vote on Monday to reinstate sanctions on ZTE in a direct challenge to President Donald Trump's decision to resuscitate the Chinese mobile phone maker.

The reinstatement of a ban on ZTE purchases of U.S. cellphone components has been added to a must-pass defense bill the Senate will take up Monday. It is unclear whether the measure will survive into the final law approved by both chambers of the Congress amid intense opposition from the White House.

The Department of Commerce last week said it would lift the ban on American technology exports to ZTE in exchange for a hefty fine and a management reshuffle at the Chinese company. It imposed the ban in April alleging that the cellphone maker exported to Iran and North Korea in violation of sanctions imposed against those countries.

Senators on both sides of the aisle are critical of the White House's decision, viewing the company as a security threat involved in Chinese government spying.

Trump used the possibility of lifting the ZTE sanctions as a bargaining chip in trade talks with Chinese President Xi Jinping. On Wednesday, the White House issued a statement urging Congress to respect the Commerce Department deal.

Reinstating the sanctions could further aggravate trade friction that looks likely to grow after Trump pulled the trigger Friday on a 25% tariff on $50 billion of Chinese imports.

But the effort to revive the ban faces high hurdles. Even if the defense bill passes the Senate, it must be reconciled with a version already passed by the House of Representatives, which does not include the ZTE measure.

Trump could also wield his presidential veto, but he does not want to block the must-pass defense spending measure outright. The White House is leaning on the Senate to pull the ZTE penalty.

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