I've seen it argued that it is illegal, a direct violation of the emoluments clause of the constitution. I'm not a lawyer, let along a constitutional one, so I can't say that with any authority, but everything about it certainly screams that it is a violation. And it certainly does seem like we're moving towards (if not already being there) a banana republic.
Forcing a company that employees 75,000 people in China out of business doesn't seem like the right outcome. I would expect the U.S. and China to negotiate some sort of more appropriate remedy that is better for all sides.
No the company made itself go out of business. First they violated export restrictions, then after apologizing and paying a fine it turned out they had explicit intent to continue violating export restrictions.
In response they were told they could no longer purchase American technology. Then they chose to go out of business.
They chose to go out of business. No one required that they break the law, and if they hadn’t they would be fine. The alternative is that companies can break the law however much they want if they’re large enough.
There are plenty of alternatives. I'm not suggesting the U.S. let ZTE wantonly violate sanctions or that a mere fine is enough to fix things. But there's surely some middle ground. Imagine if the top leadership of Apple had done something similar and sold a few prohibited items to Iran. Why destroy the entirety of Apple over that, most of which is a benign electronics business that employs massive amounts of people? Alternatives could include firing or arresting all of the top leadership, putting in place strong enforcement mechanics to ensure it never happens again (with the assistance and assurance of the State), trades for other things that are desirable for us, etc.
Perhaps the alternatives that the Trump administration will propose are weak and will be a terrible bargain, but that's a different matter than saying we shouldn't even consider alternatives.
The problem was that the fine was not sufficient. Then ban on using American component cam about because it was discovered the ZTE planned to continue selling despite explicitly stating that they wouldn’t, and having already been fined.
The ban that killed ZTE was not a result of them breaking the law. That merely resulted in a fine. The ban came about as a result of ZTE deliberately planning to continue breaking the law after already being caught, charged, fined, and explicitly agreeing to stop. Give. Than background what should have been done?
If you have a better solution, something that guarantees that ZTE won't be making products for the US market that are designed to spy on Americans, I'm all ears.
This argument gets repeated a lot but I don't get the logic. If you don't like ZTE products don't buy them or even ban their use or import. ZTE doesn't just sell to the US market though. How is forcing ZTE out of business a proper solution to your concern about spying?
Edit: Please note that I am responding specifically to the argument that the ban was "something that guarantees that ZTE won't be making products for the US market that are designed to spy on Americans", which I have seen being used by politicians and other commentators.
The problem isn't selling things in the US or not, the problem is that they were deliberately choosing to sell to Iran and North Korea, despite trade sanctions and export restrictions.
They had been caught, they paid a fine, but then it turned out that they were deliberately planning to continue selling them, despite already being caught, charged, fined, and agreeing to stop.
The /only/ way that they could be made to stop selling restricted components from the US was clearly to prohibit them from using those components at all.
I added a note in my original comment to emphasize that I was responding to the specific argument by the parent comment.
On the factual basis the ban is reinstituted not for the reason you stated that "they were deliberately planning to continue selling them". That was part of the case the led to the original fine. The reimposition of the ban is on a more technical ground.
By the way under the original settlement ZTE is under much stricter supervision and audit. If you kill off ZTE you lose that control as well. The decision to reinstate the ban was apparently done without sufficient deliberation and hurts US interests on many fronts.
"Enforcement" short of the death of the company has not worked before.
In the criminal justice system, if you are out on probation after committing a crime and then commit the same crime, you go right back to prison, for longer this time. They've repeated their crime while on probation, and thus get a stiffer sentence.
Besides the libertarian nonsense of "if you don't like ZTE products don't buy them"... well, one of the things they're doing we don't like is violating export bans to Iran and North Korea. For another, as long as they're manufacturing, their products can just get rebranded through a couple of shell companies and wind up in the US anyway.
I am unclear why you think it's so important to not hurt them.
They will operate in one form or another that is for sure. All 75000 people are not just going to sit idle.
By being overly draconian you generate a ground swell of ill will against US suppliers. Everyone in China will be looking to replace their US components as soon as it is feasible.
For what is its worth, ZTE actually self reported the recent faux pas that led to the reimposition of the sanction. Even if they don't get any credit for self-reporting it shows that the threat of intrusive audits works. ZTE right now is a lot more under the US government thumb than any other Chinese tech company. If anything Chinese government should just let the corporate form die to end the humiliation. US on the other hand, by being the executioner, only ensures that ZTE will be replaced by another Chinese player not subject to the same supervision.
A company that has repeatedly violated sanctions against Iran and North Korea. A company that all of the three letter agencies are sure is using it's phones to perform state sponsored surveillance.
I don't think we should be engaging in a trade war with China, but of all of the companies we should be offering concessions to, ZTE is not anywhere near the top of that list. Call the whole thing off, but don't single out ZTE as someone to alleviate the pains for.
Hostile behavior is hostile behavior, regardless of how many people they employee.
Do we live in a banana republic?