After much negotiation with the Trump Administration, Secretary of Commerce Wilbur Ross confirmed this morning that ZTE, the Chinese telecommunications giant, has agreed to a $1 billion fine. That penalty was assessed following an investigation showing that ZTE had violated U.S. sanctions and had provided technology to Iran and North Korea. Ross made the comments on CNBC’s morning show Squawk Box.

This was an incredible scare for ZTE. The Trump administration had previously announced that it was banning U.S. companies from selling ZTE components for seven years, components critical to its entire product line. That decision was expected to kill the company, which employees tens of thousands of Chinese workers and is worth billions of dollars in market cap.

As trade tensions have mounted, ZTE has become something of a sore point in those talks. The U.S. position has been that the fine is a law enforcement action, which should not be included in the discussions around trade. However, some sources who corresponded with me say that the Chinese government has purposely held up the acquisition of NXP Semiconductors by Qualcomm while it negotiates a more positive outcome for ZTE.

Regardless of those talks, the Trump administration is facing a deeply hostile reaction from Congress, where there is bipartisan opposition to the deal. Senate minority leader Chuck Schumer (D-NY) has said publicly that “Both parties in Congress should come together to stop this deal in its tracks.” Senator Marco Rubio (R-FL) has floated a proposal for Congress to block this sort of deal.

This is a developing story

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