The US Commerce Department said on Monday that the ban was imposed because of false statements made by the company during talks in 2016 over a charge of shipping telco equipment to Iran and North Korea.
As a penalty, US firms cannot sell parts to ZTE for seven years.
While a spokesperson for the Australian Department of Home Affairs said Canberra was aware of the advice issued by the UK’s National Cyber Security Centre and the US statement, it hinted that those actions did not apply locally since "the design and working of each nation’s telecommunications infrastructure is unique".
On Thursday, China's ambassador to Australia warned in an interview with The Australian that the bilateral relationship had been marred by “systematic, irresponsible and negative remarks” about China, and trading ties could be damaged if the situation was not repaired.
In this milieu, any Australian move against ZTE could be seen as a move against Beijing, especially given that Australia has twice acted to blunt the commercial interests of China's biggest telecommunications firm, Huawei.
The company was blocked from tendering for work on the national broadband network about six years ago.
But the door was kept open to acting against ZTE with the Home Affair spokesperson adding: "The Australian Government is committed to ensuring Australian telecommunications networks are secure and resilient.
"The Australian Government always considers the advice of its intelligence and security agencies, and monitors the actions of our international partners."
Washington's action against ZTE is likely to hit the company hard as it is the fourth top seller of smartphones in the US, and gets about 25% to 30% of components used in its equipment from American companies, according to Reuters.
Huawei has faced a barrage of moves by the US that have led to it deciding to tone down its sales efforts, as iTWire reported today.
ZTE's reaction to the US ban has been low-key with the company issuing a short statement in which it said: "ZTE is aware of the denial order activated by the United States Department of Commerce. At present, the company is assessing the full range of potential implications that this event has on the company and is communicating with relevant parties proactively in order to respond accordingly."