The fines announced on June 7 come on top of $892 million ZTE has already paid for breaking us sanctions by selling equipment to North Korea and Iran.
ZTE will pay a $1 billion penalty, and put another $400 million in escrow to cover possible future violations before being stricken from a sanctions list.
Moreover, the U.S. Commerce Department is expected to count the $361 million ZTE paid past year as part of a settlement agreement, which will allow the government to claim no less than $1.7 billion in penalties.
The Trump administration yesterday announced a deal to allow the telecommunications company to resume buying from USA companies, eliminating a key sticking point for the two nations in their talks on trade.
The US banned access to US suppliers in April after finding ZTE violated a settlement reached after it admitted to shipping goods to Iran and North Korea, countries subject to US trade sanctions.
In return, the Commerce Department will lift the denial order banning ZTE from buying American products, which has crippled the company. In addition, the company is agreeing to retain a team of special compliance coordinators selected by USA regulators.
ZTE's survival has been a topic of discussion in high-level US-China trade talks. ZTE is also required under the new agreement to replace the entire board of directors and senior leadership for both entities. The government will suspend the 10-year ban but it can activate the ban if there are any violations.
"Today, [the Bureau of Industry and Security] is imposing the largest penalty it has ever levied and requiring that ZTE adopt unprecedented compliance measures". The company's plight has attracted huge interest in China and may prove a catalyst for the government to help Chinese firms become less dependent on the USA for fundamental technology. "They will pay for those people, but the people will report to the new chairman", Ross said in a " Squawk Box " interview.
The White House didn't respond to a request for comment.
Amid mounting trade tension between the United States and China, lawmakers have grown increasingly critical of the national security threat from telecom companies such as ZTE and Huawei.
Washington and Beijing have threatened each other with massive new tariffs on up to $150 billion of exports from the two countries, the fallout from the USA demand that China buy more American goods to sharply cut last year's $375 billion Chinese trade surplus with the U.S.
"We will closely monitor ZTE's behavior", Commerce Secretary Wilbur Ross said in a statement. Earlier this month, Trump announced he wanted to help ZTE, as part of negotiating a trade deal with China.