When President Donald Trump abruptly reversed an order penalizing the Chinese telecom company ZTE for selling to North Korea and Iran in 2018, it confused almost everyone. Why was the get-tough-on-China president suddenly caving to their demands? As The Intercept’s Lee Fang and Mara Hvistendahl found out, the story behind Trump’s move on ZTE sheds new light on the role of lobbyists and foreign interests at the highest levels of his administration’s decision-making. And it involves a figure most Americans, even in his home state, have never heard of: Eric Branstad, son of former Iowa Gov. Terry Branstad.
President Donald J. Trump: Get the hell out to vote, because if I don’t get Iowa, I won’t believe that one. I may never have to come back here again, if I don’t get Iowa. I’ll never be back. You understand that, Kim?
Ryan Grim: Welcome to Deconstructed. I’m Ryan Grim, and you’re listening to a Trump campaign rally from just this week in Des Moines, Iowa.
DJT: I will say this there has never been a president that has done more for farmers and ranchers. The President
RG: The President took a moment during his rally, as he does, to single out a couple of friends in the crowd.
DJT: Ambassador Terry Branstad. [Cheers and applause.]
RG: Terry Branstad is the former governor of Iowa, the longest-serving governor in U.S. history, in fact. More recently, he was Trump’s ambassador to China. But the show today will focus more on his son.
DJT: Because his son Eric is even better than him. But I’m not going to talk about it. You know, a lot of fathers, they get angry if you say that, “Oh, I’m better than my son.” Those are not great fathers. This guy’s proud. His son is great.
RG: Eric Brandstad is basically unknown outside of Iowa, where he was the chair of Trump’s 2016 campaign. Not long ago, one of our reporters got a tip suggesting she look into Eric.
Mara Hvistendahl: I am Mara Mara Hvistendahl, and I am an investigative reporter with The Intercept.
RG: The tipster told her that Eric was, “the Hunter Biden of Iowa.”
DJT: Hunter was being paid for access to his vice president father, who was specifically put in charge of Ukraine and Russia.
RG: That ended up sending her and her colleague —
Lee Fang: My name is Lee Fang, I’m a reporter at The Intercept.
RG: — down an investigative route that would eventually connect the Branstads to a much bigger story.
MH: I would say the details of this story are not widely known in Iowa. But a lot of people there have long suspected that there is something that is not entirely right with the state’s political dynasty.
DJT: We have very unfair trade with China. We’re going to have a trade deficit of $505 billion this year with China.
LF: During the 2016 presidential campaign, one of the big campaign lines, one of the big promises by Donald Trump was that he was going to crack down on China, he is going to stop the flow of jobs going overseas, and that he would get tough on a country that he claimed that the political establishment had given a pass for decades and decades.
DJT: I love China, I love the Chinese people, but they laugh themselves — they can’t believe how stupid the American leadership is.
MH: But, for the first few years, the administration somewhat soft-pedaled on that issue. That shifted in 2018.
Newscaster: Trump announcing new tariffs against China. Is this a sign we’re heading into a global trade war?
Newscaster: The message from China is loud and clear: We do not want a trade war, but if you start one, we’ll fight it.
LF: The Trump administration singled out ZTE. This is a major telecoms and electronics producer.
Newscaster: Chinese telecoms maker ZTE is being blocked from exporting sensitive technology from America.
MH: They came into the crosshairs of the Commerce Department because they violated U.S. sanctions by selling to North Korea and Iran.
LF: So the Trump administration proposed an order that prevented U.S. manufacturers from selling or supplying goods to ZTE.
Newscaster: This is a potentially devastating blow to ZTE. American brands provide up to 30 percent of the parts in ZTE smartphones.
LF: This was a company that was seen by many of the Trump administration, many of the national security establishment as a potential rival to the U.S. — not just a business rival, but a national security threat.
Newscaster: Every U.S. intel agency has said that ZTE phones made by a Chinese company close to the Chinese government are at risk of surveillance.
LF: But within a few weeks, the order fell apart and Trump unexpectedly tweeted that he would roll back the sanctions.
Chris Wallace: President Trump shocked a lot of people this week when he tweeted this. Let’s put it up on the screen.
Chris Hayes: “President Xi of China and I are working together —
Brian Williams: “ — to give massive Chinese phone company ZTE —“
Shepard Smith: “ — a way to get back into business fast. Too many jobs in China lost.
Chris Matthews: “ — Commerce Department has been instructed to get it done.”
BW: “Those words from the President amounted to a shocker.”
DJT: President Xi asked me to look at it. I said I would look at it.
Sen Chuck Schumer: President Trump bemoans too many jobs in China lost. What about American jobs?
DJT: Anything we do with ZTE is always, it’s just a small component of the overall deal,
SCS: “The Art of the Deal.” It should be President Xi who writes the book, because he’s taken us to the cleaners on ZTE.
MH: Why the Trump administration decided to make a deal with ZTE —
LF: — why Trump would reverse course, on a target that seems to fulfill a lot of his campaign promises, getting tough on China —
MH: — has always been a bit of a mystery.
Sen Marco Rubio: I disagree on the decision they made about ZTE. Why do you think
Wolf Blitzer: Why do you think they made that decision on ZTE?
SMR: Well, I don’t know. You’ll have to ask the White House what it was based on.
MH: What happened between April 2018 and July 2018?
Newscaster: Joe Biden continues to defend his son, saying that Hunter Biden did nothing wrong.
Tucker Carlson: Hunter Biden’s lucrative relationship with Ukrainian energy company called Burisma.
Newscaster: Is there a whiff of nepotism that Hunter Biden got this privileged position?
Geraldo Rivera: I feel sorry for Hunter Biden: 49 years old, in and out of rehab, he grabbed onto his dad’s coattails and got these jobs.
MH: You know, so someone says to me, Eric Branstad is the Hunter Biden of Iowa. You know, it suggests that he: A) has been riding his father’s coattails and, you know, possibly making money off his father’s position as a prominent politician. And you know, B) that there’s also some connection to China.
Newscaster: What’s the real story about Hunter Biden and China?
Newscaster: President Trump wants China to investigate Hunter Biden’s time on a corporate advisory board.
DJT: His son walked out with $1.5 billion from China. These were not the same Chinese people I just dealt with, I will tell you that.
MH: Eric Branstad really is a fascinating character, much in the way that Hunter Biden is because, like Hunter Biden, he has this checkered past. For many Iowans, one of the defining things about Eric Branstad is that he was involved in this car crash when he was 16 that killed two people. And that was a big controversy in Iowa in the 1990s.
Then that was followed by several other incidents involving alcohol and reckless behavior.
While Eric Branstad’s father Terry was governor of Iowa, Eric Brandstad started an LLC called Matchpoint Strategies, and he took in tens of thousands of dollars from politicians and so forth in the state, to do consulting work and fundraising work on their behalf. There’s no indication that that is illegal, but that does raise questions about whether he is trading on his father’s name.
Newscaster: Decision 2016 coverage this morning: Iowa starts and helps finish the race for the White House.
MH: Terry Branstad and his son Eric Branstad were extremely crucial to Donald Trump winning Iowa in 2016.
Speaker: Nine months and a day after the Iowa caucuses, the campaigns are still focusing on our state. This is a big battleground state.
MH: Iowa plays an outsized role in U.S. presidential politics, because it’s the first state in the country to have any sort of primary.
Newscaster: In Iowa, the urgency is palpable. It went for President Obama twice.
MH: So every four years, candidates come in seeking endorsements. And it was as part of that process that Eric Branstad connected with Donald Trump,
LF: Eric Branstad was essentially barnstorming the state, following each presidential candidate, and pressuring them to support the ethanol biofuel lobby policy agenda. And I think this is how Eric Branstad and Donald Trump got to know each other, because Eric Branstad was courting all the presidential candidates on behalf of the ethanol lobby. And that’s how he came in contact with Trump.
Eric Branstad: I taught him about, you know, what, what ethanol is what biofuels are.
LF: You know, according to Eric Branstad, he was helping Donald Trump tour an ethanol plant and discuss these policy issues with him. And from there, they formed a relationship
EB: That May, he flew me out to New York, and he asked me to be the state director for the general campaign —
MH: And that same month, his father, Terry Branstad, endorsed Trump. That was a really crucial endorsement.
You know, if you remember back in early 2016, many Republicans were still on the fence about Trump; it was a really crowded race in Iowa. Because Terry Branstad has so much influence, he was able to get all of the establishment Republicans to fall in line behind Trump.
Newscaster: Governor Branstad says a lot is at stake in this election. He feels Donald Trump is the best candidate when it comes to national security.
MH: So the Branstads and other Iowa Republicans were basically with Trump from that day on.
EB: We are ready for change. And Mr. Trump brings that change.
Newscaster: Eric Branstad, the son of Iowa’s longtime GOP governor, runs Trump’s operation here —
LF: Eric Branstad became a campaign official paid by the campaign, and Terry Branstad became one of the most important surrogates for the campaign in Iowa, a state he handily carried in the General Election.
Wolf Blitzer: CNN projects Donald Trump will win the state of Iowa with its six electoral votes. With this win in Iowa, Donald Trump expands his lead.
Newscaster: Now, on Today in Iowa, a historic election since Donald Trump to the White House.
Newcaster: In Iowa, a lot of the focus has been on what role Governor Terry Branstad could potentially fill in the Trump administration. His son, Eric Branstad, was the state Director for Donald Trump in Iowa.
DJT: Thank you, everybody. It is great to be back in the incredible, beautiful, great state of Iowa. [Cheers and applause.] Heading up our effort to represent America’s interests in China will be a man you know very well.
MH: Terry Branstad was, in many ways, a very logical choice for ambassador. He had these long-standing ties to China. In part, that’s because Iowa trades so much with China; they’re the major export market for a lot of Iowa’s agricultural products.
DJT: When I was campaigning in Iowa, Terry would always say, “Do me a favor, don’t say anything bad about China.” I said, “Why?” I said, “We have a great relationship with China.”
MH: But it’s also because he actually has a personal relationship with Xi Jinping. The two of them met when Xi visited Iowa in 1985, when he was a low-level Chinese official, and Branstad was in his first term as governor.
So when the time came for Trump to find a role in his administration for Terry Branstad, this seemed like the obvious move.
DJT: And it really dawned on me when I was thinking about ambassadors. I said, “Boy, wouldn’t it be great if I picked a man that really likes China” — and, by the way, China really likes him.
MH: And then Eric Branstad, was appointed to the Commerce Department not long after that.
DJT: China’s going to benefit, and we’re going to benefit, and Terry’s going to lead the way. So I just want to congratulate him. [Cheers and applause.]
MH: When relations between the U.S. and China started to really turn sour with the trade war, people in Iowa who had profited off this relationship were definitely alarmed.
The U.S. had levied tariffs on Chinese goods and, in retaliation, China levied tariffs on pork and soy in the U.S., which really hurt farmers in the Midwest and also really hurt the big ag companies.
Newscaster: Iowa gets hit hard. One of the country’s top soybean producers and the top pork producer.
MH: At several points, Terry Branstad either traveled back to Iowa or, you know, wrote an article in The Des Moines Register telling people in Iowa: Hold tight. This trade war is all gonna make sense at some point. And, you know, kind of stay on Trump’s side.
Newscaster: Is there a point when Iowan farmers abandon Trump?
Iowa farmer: Yeah, there is a point.
Newscaster: There is a point.
Iowa farmer: Yeah.
Newscaster: And where is that point?
Iowa farmer: Gosh, I wish I knew. We might be there.
MH: These tariffs hit Iowa really hard. Many people really suffered as a result of the trade war there.
Newscaster: Among the stories that are front and center this morning, China-based telecom company ZTE is blasting the United States decision to impose sanctions on the company. The U.S. banned American companies from selling to ZTE for seven years. ZTE says the decision is unfair.
LF: When ZTE was being threatened, they retained a lobbying firm called Mercury Public Affairs. It’s a bipartisan lobby shop. They’ve been around for 20 years. They retain a lot of prominent Democrats and Republicans. So this is a firm with a lot of influence, which has staffed up in recent years, hiring more and more people with ties to the Trump campaign and Trump administration.
Just as this ban was being processed and announced, Eric Branstad had left the administration and joined Mercury Public Affairs and ZTE immediately went to work to unwind this order proposed by the Commerce Department.
MH: Eric Branstad came on in Mercury in late February 2018. The trade war broke out in March; the Commerce Department banned companies from selling to ZTE in April.
Trump then suddenly tweeted that he would look into getting a deal for ZTE and, you know, abruptly reversed course. And around that same time, ZTE hired Mercury to lobby on its behalf.
And then in June, Eric Branstad traveled with Brian Lanza, the registered lobbyist for ZTE, to China to meet with two groups. One of those groups is a kind of fake Chamber of Commerce that has ties to the United Front, which is a Communist Party organization that has come under heightened scrutiny in Washington in recent months. And the other group is called the China Development Research Foundation, and that has ties to China’s Ministry of State Security, which is kind of like a cross between the FBI and the CIA.
So we know about these meetings because of posts that Lee and I found on the websites of those two groups in Chinese. The posts claimed that, at the meetings, they discussed Trump administration policy, they discussed the trade war, and they discussed something that they called win-win cooperation between the U.S. and China.
And there was another surprise on the Chinese websites. I was shocked to discover that accompanying Eric Branstad and Brian Lanza on that trip to China was someone named Li Zhao.
Li Zhao is a Chinese-born businesswoman who runs a consultancy in Des Moines called the China-Iowa group. And I knew about her because she actually came up in my book, “The Scientist and the Spy.” In that book, I discuss an industrial espionage case in which a man working for a Chinese company in Iowa was accused of stealing proprietary corn seeds from U.S. companies. Li Zhao had had a number of conversations with the defendant in the case; she was investigated by the FBI; they recorded her phone calls and searched her computer, subpoenaed her emails. But I should, you know, should make clear that Li Zhao was never arrested or convicted of any crime. But her presence on the trip seemed to raise questions about Eric Branstad’s story.
LF: Eric Branstad has told us that this trip had nothing to do with business, that he just went to share cultural stories, old campaign stories, and not really discuss anything in terms of public policy or business. But there’s a little bit of information that appears to undermine that claim. We have some messages from Mercury internally that show that Lanza and Branstad were actually on a trip to set up a Chinese office for Mercury Public Affairs to drum up business for the firm.
In addition, we have some accounts of their meetings from Chinese sources. The Chinese chambers of commerce and Chinese think tanks that sponsored Lanza and Branstad published accounts of those events, and they make clear that Lanza and Branstad were there as representatives of Mercury Public Affairs, and that they discussed the trade war and U.S.-China relations and other issues of public policy concerning the two countries.
MH: It’s not clear from the posts on the Chinese group’s sites whether they specifically discussed the Trump administration’s ZTE order. But what we do know is that a few weeks after those meetings, the administration reversed course and struck a deal with ZTE.
Chris Matthews: President Trump caused jaws to drop on Sunday when he put out that he was intervening to save a Chinese government-owned cell phone company in order to save — catch this — he wants to save Chinese jobs, he said.
Newscaster: Donald Trump mysteriously reversed his position on ZTE.
Newscaster: The nascent trade war is off. ZTE lives to fight another day.
Newscaster: Why now is the president so gung-ho to save a company his own administration punished for violating U.S. sanctions against Iran and North Korea?
Brian Williams: You don’t often hear a U.S. president asking to make a Chinese company great again.
LF: When Trump suddenly announced that he was rolling back his order, that was really shocking to a lot of Washington. A number of leading Republican and Democrat legislators sharply condemned the reversal. You had even John Bolton surprised and saying, you know, he didn’t understand why Trump was reversing course on a whim.
Not long after that, the sanctions were lifted after paying the fine and agreeing to some terms. So it was a lot of buildup, but not a lot of action — basically a slap on the wrist, according to many critics of the deal.
MH: You know, it wasn’t just that ZTE was selling technology to North Korea and Iran. It’s also that the company has close ties to the Chinese military and, you know, just in general, it is a very sensitive technology that can be used for surveillance purposes. It’s sort of the major competitor to Huawei in China and makes similar technology.
The U.S. has really gone after Huawei in the past few years and ZTE has somehow been given a pass. And so why that is, why we’ve gone after Huawei with such fervor, and, you know, let ZTE roll back this order, despite you know, repeatedly breaking Commerce Department regulations has always been a mystery.
Newscaster: Today the White House defended the President’s pledge.
Newscaster: How does President Trump’s statement that too many Chinese jobs are at risk square with his campaign promise that China is stealing American jobs?
Press Secretary Raj Shah: Well, I don’t think this has, frankly, any bearing on the President’s campaign promises.
DJT: I mean, look what I’ve done. Look — who’s done what I’ve done? I took ZTE off. If you remember, I was the one, I did that — that was a personal deal. And then President Xi called me, and he asked me for a personal favor, which I consider to be very important. He’s a leader of a major country.
Sen Chuck Schumer: It’s a security risk and why is President Trump in a simple call with President Xi just letting it continue.
MH: Trump has really gone after Biden for not just things that Hunter Biden has done. But also for Joe Biden’s own alleged softness on China.
DJT: Joe Biden is weak, and will always cave to China who is strong.
MH: PACs supporting Trump have put out ads calling him “Bejing Biden.”
Advertisement: Now, more than ever, America must stop China. And to stop China, you have to stop Joe Biden.
MH: Really going after him for supposedly being soft on China.
DJT: If Biden wins, China will own America and it won’t take long with his son Hunter walking out with all of that money, with no experience whatsoever. No investment experience! He didn’t even have a job.
MH: Brian Lanza himself is a former Trump campaign adviser/ Eric Branstad played a big role in the 2016 campaign and he’s now back working on the 2020 campaign for Trump.
EB: I did the Lake Red Rock boat parade on Saturday. I did the Coralville Reservoir boat parade on Monday. The crowds have been absolutely ridiculously large.
MH: Terry Branstad, just this month, left the ambassadorship in Beijing to go back to Des Moines. And he’s also expected to hit the campaign trail and stump for Trump again.
Terry Branstad: Our great new president, who’s gonna make America great again.
MH: These are not just bit players in the administration; these are people with close ties and close relationships to Trump, who have worked on his campaign, gone to the administration, come out again, gone into lobbying — you know, it’s just really this revolving door that has let in Chinese interests.
LF: When Trump ran for office, he promised to drain the swamp, to get tough on lobbying. But it’s clear over the last four years, he’s staffed his entire administration with people who are business executives, who are lobbyists, who are big campaign contributors. This was a phenomenon in many other administrations, but it got put on steroids with the Trump administration.
MH: I think our reporting shows that interests serving China have swirled around this administration; that lobbyists working on behalf of very controversial Chinese companies have had very good access to this administration.
Many people wanted to talk about the Brandstads; very few people wanted to talk on the record. But somebody told me at some point: this is the swampiest of the swamp. It’s very swampy.
LF: Eric Branstad, he’s just one of hundreds of examples of folks who staff the Trump administration, who worked in the lobbying and public affairs industry before going in.
MH: The Brandstads still have a fair amount of power in the state. Many people did not want to go on the record criticizing them. But there is a lot of gossip about what is basically Iowa’s political dynasty.
LF: No matter who wins the White House this election, there is going to be a big demand in terms of hiring people who are experts at U.S.-China policy, who have influence at the Commerce Department and other federal agencies.
MH: If Trump loses in November, I don’t think that that will be it for Eric Branstad. I think he will continue to operate, probably behind the scenes. I don’t think he will run for office himself, but he has said that he is encouraging his wife to do so, and there are a number of big positions that will open up in Iowa soon. And so, you know, who knows?
Zach Young: That was Mara Hvistendahl and Lee Fang. You can read their full story, “China’s Man in Washington,” at theintercept.com.
And that’s our show. Deconstructed is a production of First Look Media and The Intercept. I’m Zach Young. I produced the show. Today’s episode was a little different than what we normally do. Did you like it? Did you hate it? Let us know. You can send us your thoughts at [email protected]
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