In February, U.S. intelligence officials warned Americans not to use smartphones made by ZTE or Huawei - another Chinese telecom company - as the communication technology could be compromised "to gain positions of power inside our telecommunication networks that provides the capacity to exert pressure or control over our telecommunications infrastructure". The ban would essentially cripple ZTE to the point of potential bankruptcy.
Trump has said he reviewed the penalties as a personal favor to Chinese President Xi Jinping. It would hurt ZTE for sure, but keep the company in business.
Republicans hoping to avoid a direct clash with the White House over the ZTE deal are eyeing that reconciliation process to mitigate the Senate's latest step.
ZTE is back in business: What now?It's a stunning turnaround, though it had been signalled for some weeks.
The Trump administration announced late last week that it had reached a deal to lift penalties against the company in exchange for ZTE paying a $1 billion fine and embedding a USA -selected compliance team in the firm. However, it wouldn't be the first time the President chose the unexpected route.
Republican and Democratic senators who support the original ZTE punishments feel strongly that ZTE's flagrant violations deserve the ultimate punishment, and not a "slap on the wrist" fine. However, that deal faced criticism from other members of the US Government from the beginning.
Per Trump's deal, ZTE will pay $1 billion in fines and put $400 million in escrow, as well as overhaul its board of directors.
The measure is being included as part of a package of changes agreed upon by committee leaders, meaning that the Senate is likely to include it as part of the defense bill later this week. They added a provision keeping the Commerce Department penalties in place to a substitute amendment that is expected be tacked on to the defense bill before it passes the chamber.