A statement from the Commerce Department said that In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government. "Instead of reprimanding ZTE staff and senior management, ZTE rewarded them".
Secretary of Commerce Wilbur L. Ross on Monday ordered American companies not to supply components to ZTE Corp. for seven years, saying it failed to discipline or reduce bonuses to senior employees as required by the 2017 settlement.
And although the White House and the Committee of Foreign Investment in the USA has moved against China in recent weeks, it insisted that the new decision to block ZTE - already under investigation by the Barack Obama administration - is part of a backlash against the country which also includes countries such as Germany, Australia and Canada.
A spokesperson for BT told the Financial Times: "BT takes the security of the UK's critical national infrastructure very seriously and has a robust testing regime in place to ensure that the equipment from all suppliers used in our network remains secure".
ZTE agreed in March of past year to plead guilty and pay as much as $1.2 billion for violating USA laws restricting sale of American technology to Iran.
It also comes amid heightened tensions between the USA and China, which are now engaged in a tit-for-tat exchange of possible tariffs.
He first threatened to name China as a "currency manipulator" during his first days of office but reversed his position after his first three months in office and took no action.
The suspension followed security watchdog National Cyber Security Centre (NCSC) warning telecoms companies in the United Kingdom about the long term threat ZTE pose to the infrastructure of these companies.
Mr Trump has repeatedly accused Beijing of "manipulating its currency", tweeting: "Russia and China are playing the Currency Devaluation game as the US keeps raising interest rates".
USA firms are also likely to get caught in the crossfire, with the fallout set to hit Qualcomm Inc, which provides the lion's share of chips inside ZTE smartphones. The technology bought by the company includes components central to its products.
The ban on supplying ZTE comes two months after two Republican senators introduced legislation to block the USA government from buying or leasing telecommunications equipment from ZTE or Huawei, citing concern the companies would use their access to spy on US officials. ZTE already sells both its branded and white-label smartphones via mobile carriers AT&T and Verizon in the US.