The Trump administration is taking aim at Chinese telecom giant ZTE. The US commerce department now wants American companies to stop supplying components to the Shenzhen-based corporation. Our reporter Sean Callebs explains what's behind the move.

SEAN CALLEBS WASHINGTON It is a punishing hit for ZTE Corp. ZTE is a top smartphone seller in the United States. But the U.S. Commerce Department has banned major U.S. companies such as Qualcomm and Dolby, from selling parts to ZTE for the next seven years. The U.S. contends ZTE failed to live up to the terms of a sanctions violations case. The Shenzhen-based company pleaded guilty to violating U.S. sanctions, by selling U.S. goods and technology to the DPRK and Iran. ZTE was hit with a fine of 890 million dollars, and faces the possible additional penalty of 300 million dollars more. In addition, the company was supposed to fire four senior employees and punish 35 others for their role in the deal. It turns out ZTE DID dismiss the four senior employees, but didn't reduce bonuses, or reprimand the other 35 employees who acted illegally. The Trump Administration is labeling ZTE's inaction as "egregious behavior that can't be ignored". But others believe it could be an over-reaction.

DAN IKENSON, DIRECTOR CATO INSTITUTE "It seems to me that failing to follow through on firing certain officials shouldn't lead to something as drastic as what we're seeing here. So, it seems that other factors are contributing to this decision. You know, the ZTE may have been given an extra couple of weeks or months to follow through on this commitment, but instead, I think the Commerce Department, the Trump administration, wants to demonstrate that they're playing hardball."

SEAN CALLEBS WASHINGTON The U.S. action comes at a time with mounting pressure from Washington on Chinese telecom giants-and a broader escalation of tariffs between the two largest economies in the world. Meanwhile, Huawei has been in the news recently, with the U.S. issuing a public warning against using Huawei phones due to alleged security risks and espionage concerns. AT&T and Verizon have reportedly dropped their plans to sell Huawei smartphones. Until now, ZTE's CEO had claimed that ZTE was basically dragged into the discussion because of all the focus on Huawei, and pointing out it uses U.S. products in its phones.But that was before this latest news from the Commerce Department. Sean Callebs Washington.