The news comes as the USA prepares to send a trade delegation back to Beijing next week to continue talks aimed at defusing a potentially serious trade dispute with China after the countries exchanged huge tit-for-tat threats on imports.
The comments from Schiff, the top Democrat on the House Intelligence Committee, came a day after Trump indicated that he had chose to allow ZTE to "reopen with high level security guarantees, change of management and board".
In a follow-up tweet, he called the "so called Trade Deals" struck by Democrats "the laughing stock of the world!"
News of the ZTE agreement came almost a week after the US and China suspended plans to impose tariffs on as much as $200 billion of each other's goods, putting them on the brink of a trade war.
U.S. President Donald Trump on Tuesday floated a plan to fine ZTE up to $1.3 billion and shake up its management as his administration considered rolling back more severe penalties that have crippled the Chinese telecommunications company. The Trump administration accused the company of violating the 2017 settlement after ZTE was caught shipping United States components to North Korea and Iran and ordered to pay a $900 million penalty.
It's the latest twist in a saga of geopolitics and high technology that has its roots in ZTE's violations of USA sanctions against Iran back in 2010.
However, the House and Senate have been advancing legislation that would tie the hands of the president in dealmaking with ZTE, which is under a crippling US ban because it did business with Iran and North Korea in violation of sanctions.
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The fine would come on top of the roughly $1 billion ZTE has already paid for selling equipment to North Korea and Iran in violation of USA sanctions.
Trump said ZTE would have to pay a $1.3 billion fine and commit to offering "high level security guarantees" and "a change of management and board".
On Thursday, Mr Ross said that at Trump's request, his department was looking at alternatives to the harsh penalty he chose to impose.
Although the United States and China are reported to have agreed the broad outlines of a settlement over ZTE the issue has become inextricably linked with wider trade and security tensions between the two powers. Passing such a law could be hard, but lawmakers could also pressure the administration by threatening to block any votes on Trump nominees or even unrelated trade agreements until they are satisfied.
ZTE also is considered a national-security risk because the Chinese government could spy though the phone. The president angrily denied back-pedalling.
"Yes they have a deal in mind", Mr. Rubio said in a tweet on Friday. Marco Rubio tweeted Friday. "#China crushes U.S. companies with no mercy & they use these telecomm companies to spy & steal from us", he said on Twitter.
Senate Minority Leader Chuck Schumer also expressed frustration in a statement.
"If the administration goes through with this reported deal, President Trump would be helping make China great again", said Democratic Sen.