Commerce Secretary Wilbur Ross Confirms ZTE Deal

Following reports that he’d lifted early sanctions posing an existential threat to ZTE, U.S. Commerce Secretary Wilbur Ross confirmed Thursday on CNBC he’s struck a deal with the Chinese telecom company involving a $1 billion fine and $400 million in escrow.

Ross had been exploring alternatives to the sanctions that banned ZTE from purchasing supplies from QUALCOMM, Inc. QCOM, Alphabet Inc GOOGL GOOG and other U.S. companies.

Why It’s Important

Ross said the arrangement serves as a warning to other companies not to mess with U.S. trade policies.

Nonetheless, the specifics of the deal read positively for U.S. telecom companies on Thursday morning:

• Acacia Communications, Inc. ACIA popped 4.9 percent;
• Lumentum Holdings Inc LITE 2 percent;
• Oclaro Inc OCLR 1.5 percent; and
• Finisar Corporation FNSR 1.3 percent.

What’s Next

Although the U.S. worked a deal with an individual company, it has not yet finalized trade talks with national trading partners. The Trump Administration is expected to impose tariffs after June 15, although the relationship remains negotiable.

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Photo by Karlis Dambrans/Wikimedia.