The sanctions banned ZTE from trading with USA companies - blocking them from buying the microchips they needed, and effectively shuttering the company.
To save his ZTE deal, Trump would have to veto the entire defense-authorization bill, which would go against his long-standing statements on the military and USA defense protocols.
The ZTE settlement came days after Beijing reportedly offered to boost purchases of American goods by $70 billion in order to fight a trade imbalance with the United States, while US President Trump has demanded a $200 billion reduction in its trade deficit with China over two years.
Shares in ZTE Corp. fell 42 percent Tuesday in Hong Kong on their first trading day after the Chinese telecoms equipment maker agreed to pay a $1 billion penalty to the US government and replace its top managers. But thanks a new bipartisan amendment to the upcoming "must-pass" National Defence Authorization Act, it seems ZTE's one remaining lifeline would disappear by retroactively reinstating the original seven-year ban.
He said the speed of the pushback, and the striking bipartisan coalition - chief sponsors include Sen.
The Senate was expected to pass its bill as soon as this week.
Once through the Senate, the bill would move to a conference committee with the House, which passed its own version of the bill without the amendment related to ZTE.
But Trump then announced in mid-May that he was working with Chinese President Xi Jinping to find a way to get ZTE back into business.
But the ban on buying USA parts, imposed by the department in April, will not be lifted until the company pays the fine and places $400 million more in escrow in a US -approved bank, the agency said.
The White House didn't immediately respond to a request for comment.
The U.S. Senate advanced legislation to restore penalties on ZTE, after President Donald Trump advocated for the Commerce Department settlement easing restrictions.
"China is using its telecommunications companies as means to conduct espionage". Marco Rubio (R-Fla.), another chief backer of the amendment. The idea of ZTE being used as a bargaining chip in trade negotiations with China angered lawmakers, who view the company as a national security issue.
The measure is being included as part of a package of changes agreed upon by committee leaders, meaning that the Senate is likely to include it as part of the defense bill later this week.