A potential deal to spin off TikTok’s U.S. operations has been paused as rising tensions between the U.S. and China disrupt negotiations. The White House-led effort was derailed after President Donald Trump imposed steep new tariffs on Chinese imports, triggering backlash from Beijing.
Sources cited by the Associated Press and Reuters say Chinese officials are now hesitant to proceed, increasing the likelihood that Beijing will reject the proposed deal. Under the plan, TikTok’s U.S. operations would become a new, U.S.-based company with majority ownership by American investors. ByteDance, TikTok’s China-based parent company, would retain less than a 20% stake.
The deal had received approval from ByteDance, existing and new investors, and reportedly the U.S. government. However, recent developments, including Trump’s extension of a TikTok ban and his comments about potentially offering tariff relief in exchange for a deal, have complicated matters.
Over the weekend, Trump imposed a sweeping 54% tariff on Chinese goods—the highest in his latest round of trade actions. The move triggered swift retaliation from China and sparked global market volatility, erasing an estimated $4 trillion in value. Trump defended the tariffs, stating they would remain in place until the U.S. trade deficit is resolved, calling them a “beautiful thing.”
As geopolitical tensions escalate, the outlook for a TikTok resolution grows increasingly uncertain. The fallout from the U.S.-China trade war continues to ripple across global markets, complicating any potential path forward for the short video app in the U.S. market.