Trump appears to backtrack on sanctions relief for Chinese tech giant ZTE amid escalating concerns

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President Donald Trump

• President Donald Trump backtracked on promises to lift sanctions on Chinese telecom maker ZTE, saying "nothing has happened with ZTE."
• The tweet comes after lawmakers from both sides of the aisle criticized the potential move, pointing to national security concerns.
• Trump's team has been scrambling to focus the ZTE controversy.

President Donald Trump's back-and-forth on Chinese tech giant ZTE's sanctions continued Wednesday morning, when the president appeared to backtrack on promises of sanctions relief for the company.

"Nothing has happened with ZTE except as it pertains to the larger trade deal," Trump tweeted.

The message came just days after Trump said that the US would roll back sanctions on ZTE, the second-largest telecom equipment maker in China.

"President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast," Trump tweeted Sunday. "Too many jobs in China lost."

The US sanctions against ZTE came after the company was found to have sold equipment containing US parts in Iran and North Korea. The Commerce Department banned sales of US parts to the firm, alleging the company lied in its response to the initial discovery.

The ban effectively crippled the company. ZTE said in a statement earlier this month that "the major operating activities of the company have ceased." Trump tweeted about possible relief four days later.

Lawmakers have national security concerns about ZTE

Trump's backpedaling Wednesday followed days of criticism from lawmakers on both sides of the aisle. In particular, lawmakers worried about ZTE sanctions being used as a bargaining chip in a trade deal, since the sanctions were slapped on as part of a national security investigation.

GOP Sen. Marco Rubio attacked Trump's move after reports that the ZTE decision would come in exchange for China lifting tariffs on some American agricultural products.

"About to get out negotiated by #China again," Rubio tweeted Tuesday. "Apparently 'deal' is we lift sanctions imposed on ZTE for helping Iran & N.Korea & they can resume spying & stealing our intellectual property. In return China remov­es tar­iffs on US farmers who did no wrong."

Democratic Sen. Ron Wyden also cited testimony from a Trump's nominee to be the nation's top counterintelligence official, who said ZTE posed a risk to the US.

"@realDonaldTrump's comments about ZTE sound an alarm bell for counterintelligence, cyber security, & red, white and blue jobs," Wyden tweeted. "His own top counterintelligence official said ZTE threatens U.S. national security. In my view, giving sanctions relief to ZTE is a big mistake."

Derek Scissors, a resident scholar at the American Enterprise Institute, said reversing the sanctions as part of a trade deal would break norms of trade talks and undermine the US position to demand reforms from the Chinese government.

"Worrying about job losses in China is very odd, but it's not actually important," Scissors wrote. "What's important is whether a giant Chinese state-owned enterprise gets away with breaking American law. If ZTE does, President Trump will be guilty of what he correctly accused his predecessors of - letting China harm the United States."

The Trump administration is trying to blunt the criticism

Hoping to stem the national security concerns, Trump administration officials have attempted to softened his promises.

Commerce Secretary Wilbur Ross said his department is looking into "alternate remedies" for ZTE sanctions, but also tied the sanctions to national security.

"Our position has been that's an enforcement action, separate from trade," Ross said Monday.

Larry Kudlow, the president's top economic adviser, said ZTE is "really divorced from the trade story."

But Trump's tweets almost always refer to ZTE in the context of trade. Even in Wednesday's tweets on ZTE, Trump referred to the decision in the context of the trade negotiations.

"Our country has been losing hundreds of billions of dollars a year with China," he said. "We have not seen China's demands yet, which should be few in that previous US Administrations have done so poorly in negotiating. China has seen our demands."