A new front in the US-China trade war has emerged. Independent of the growing list of tariffs being drawn up by the two economic powers, the US Commerce Department has banned US companies from selling parts to China’s ZTE Corp for seven years. The punishment comes after ZTE was found to be in violation of a 2017 plea agreement reached in the U.S. after the company was caught shipping illegal goods to Iran. The agreement had called for the disciplining of the 35 employees involved in the Iran dealings; in March, ZTE admitted that it had not complied with the deal.
Although the ZTE ban might seem like a sideshow in the wider arena of US-China trade tensions, it has the potential to reverberate long after the issue’s immediate resolution, whether by judicial appeal or bankruptcy on the part of ZTE. The ban could come to be viewed as a watershed moment in the evolution of US-China relations – the day when Washington decided to join Beijing in its hitherto one-sided protectionist chess match.