UPDATE 3-Trump's pledge to help China's ZTE spurs backlash in Washington

(Adds details about potential deal)

WASHINGTON, May 14 (Reuters) - President Donald Trump's pledge to help a Chinese telecommunication company that broke U.S. sanctions law sparked a backlash from lawmakers who said the move could weaken the U.S. hand in upcoming trade talks with Beijing.

The Commerce Department last month banned U.S. companies from selling to ZTE Corp for seven years after it illegally shipped goods made with U.S. parts to Iran and North Korea, prompting the company to shut its main business operations last week.

Trump said on Sunday that he was working with Chinese President Xi Jinping to help ZTE revive jobs.

In exchange for easing that ban, Beijing would back away from threats to slap tariffs on U.S. farm goods, the Wall Street Journal reported on Monday, citing people in both countries briefed on the emerging deal.

"Too many jobs in China lost. Commerce Department has been instructed to get it done!" Trump wrote on Twitter. The White House said later that Trump expected Commerce Secretary Wilbur Ross to make an independent decision.

Ross is slated to make public remarks on Monday at an event with journalists at 1 p.m. ET (1700 GMT).

Trump's olive branch angered lawmakers from both parties, who said it looked like he was backing down ahead of high-stakes trade talks this week in Washington between the United States and China.

"Shocked. I think it shocked a lot of people in the president's own cabinet," said Senate Democratic Leader Chuck Schumer, speaking to reporters.

"Maybe he'll back off - let's hope. He's done that before too," said Schumer, who said getting tough on China was one of the few areas where he agrees with Trump.

Republican Senator Marco Rubio cited concerns about Beijing using telecom companies like ZTE , China's second-largest maker of telecommunications equipment, for espionage.

"I hope this isn't the beginning of backing down to China," Rubio said on Twitter, saying Chinese competition had "ruined" many U.S. companies.

"We are crazy to allow them to operate in U.S. without tighter restrictions," Rubio said.


Trump has long railed against Chinese trade practices he blames for losing U.S. jobs, and has turned up the pressure by threatening $150 billion in tariffs on imports of Chinese goods.

China has threatened to retaliate against U.S. exports, including soybeans and aircraft.

Two sources, who declined to be identified given the sensitivity of the matter, told Reuters on Sunday that China was willing in principle to import more U.S. agriculture products in return for Washington smoothing out penalties against ZTE, but they did not offer details.

Last week, Treasury Secretary Steven Mnuchin, Ross and other top Trump officials traveled to Beijing with a list of demands, including slashing the U.S. trade deficit with China by $200 billion, cutting tariffs and eliminating subsidies for advanced technology, according to people familiar with the demands.

Chinese Vice Premier Liu is expected to visit Washington from Tuesday to Saturday to continue the talks. Sources briefed on the matter said Beijing had demanded the ZTE issue be resolved as a prerequisite for broader trade negotiations. Since the ban went into effect last month, U.S. suppliers have been seeking guidance from the Commerce Department about inventory with ZTE.

The companies would like to withdraw the inventory so they can sell the components elsewhere. But in a possible indication that the government is considering easing the ban, the suppliers are now being told to wait a week or so before taking further action, a source familiar with the situation said.

ZTE, whose shares remain suspended, has not commented on Trump's statement.

Democratic Senator Ron Wyden questioned the timing of Trump's remark. "Unilateral concessions before an upcoming trade negotiation. This may be the art of the deal for China but it's a big loser for American workers, companies, and national security," he said.

U.S. concessions over ZTE could smooth the way for U.S. chipmaker Qualcomm Inc's $44 billion takeover of NXP Semiconductors, which has been delayed by a lengthy antitrust review by China's Ministry of Commerce.

(Reporting by Karen Freifeld, David Lawder, Doina Chiacu, Susan Heavey, Roberta Rampton; Editing by Meredith Mazzilli)