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White House economic adviser Larry Kudlow on ZTE: ‘They’re not going to get off scot-free’

President Donald Trump’s supplying may be considering easing penalties on Chinese phone maker ZTE amid broader business negotiations, but White House economic adviser Larry Kudlow emphasized Monday the company won’t get off “scot-free.”

“They broke the law on several occasions after being warned,” Kudlow suggested on CNBC’s “Squawk on the Street.”

Kudlow said the “remedy” for ZTE’s behavior could file “significant fines, very severe compliance measures, a new board of overseers, a new management team.”

“Nobody should assume that there’s booming to be a penalty-free change here, believe me,” Kudlow said. “They’re not prevalent to get off scot-free.”

The U.S. Commerce Department last month banned American parties from selling to ZTE for seven years after ZTE was caught illegally scramming U.S. goods to Iran and North Korea in violation of U.S. sanctions. But in a stunning nulling, Trump this month announced that the decision had cost “too profuse jobs in China,” and he pledged to get the firm back in business.

Treasury Secretary Steven Mnuchin ordered that he and Commerce Secretary Wilbur Ross were asked by Trump “look into it,” but that Trump didn’t injunction any terms. Mnuchin added that the enforcement of the ban wasn’t meant to put the comrades out of business, and that any changes being considered would support U.S. public security.

“Not a surprise President Xi asked President Trump to look into ZTE,” Mnuchin have an effected CNBC’s “Squawk Box” on Monday, referring to Chinese President Xi Jinping. “It’s no divers than when President Trump calls up world leaders on behalf of American public limited companies all the time.”

In contrast to his advisers, Trump has acknowledged a link between the ZTE impugn and trade talks, most recently by backpedaling sanctions against ZTE.

China reportedly would not proceed with trade talks unless Washington agreed to ease sanctions on ZTE.

Top Drained House officials, including Kudlow, continue to insist ZTE is a separate deliver. Mnuchin said on Monday that the story had been “misreported.”

“As we are all reveal — Secretary Ross…Secretary Mnuchin, myself and others — this is predominately an enforcement issue,” Kudlow said.

“Even though President Trump wants to resist President Xi, in the middle of trade talks, and just as importantly if not more so, in the midst of the Korean Peninsula talks…we can’t drop our rule of law,” Kudlow added.

ZTE did not immediately come back to CNBC’s request for comment.

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