A long-anticipated deal to spin off TikTok’s U.S. operations into an American-owned entity has been abruptly halted after the Chinese government withheld its approval, citing escalating tensions over newly announced tariffs by President Donald Trump. The delay comes despite months of negotiations involving ByteDance, U.S. investors, and the Trump administration, with a framework that had appeared nearly finalized earlier this week.
The proposed agreement would have transferred majority ownership of TikTok’s U.S. operations to American investors, forming a new company based in the United States. ByteDance, TikTok’s Chinese parent company, would retain less than a 20% stake. The deal had already received the green light from existing and new investors, ByteDance itself, and U.S. government officials.
Trade Tensions Trigger Chinese Reversal
The Chinese government’s change in stance followed Trump’s announcement of a dramatic 34% increase in tariffs on Chinese imports, bringing the total rate to 54%. In response, China imposed retaliatory tariffs, escalating the trade conflict and injecting geopolitical complications into the tech deal.
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According to sources familiar with the talks, ByteDance contacted the White House on Thursday to signal that China would not approve the divestment of TikTok’s U.S. operations unless trade and tariff negotiations were addressed. This marks a sharp reversal from China’s previously cooperative posture on the issue.
A spokesperson for ByteDance confirmed ongoing discussions with the U.S. government but stated that “an agreement has not been executed” and “key matters remain unresolved.” Any final deal, ByteDance emphasized, must go through Chinese legal and regulatory reviews.
Executive Order Buys More Time
In a move to prevent TikTok from being banned in the U.S., President Trump signed an executive order on Friday, granting a 75-day extension to finalize the sale. The original deadline, set under a 2024 national security law passed with bipartisan congressional support, had required ByteDance to divest by January 19 or face a nationwide ban.
Trump defended the extension on his social media platform, writing: “The deal requires more work to ensure all necessary approvals are signed… We look forward to working with TikTok and China to close the deal.”
This marks the second time Trump has used executive power to delay the enforcement of the law, raising legal concerns. Legal scholars argue that the move constitutes a “unilateral non-enforcement declaration,” since the law remains in effect and companies technically continue to violate it by servicing TikTok.
High Stakes for National Security and Creators
At the heart of the issue are longstanding national security concerns. Lawmakers and cybersecurity experts argue that ByteDance’s control over TikTok’s algorithm and data poses a risk of foreign influence and surveillance. “If neither of those two things change, then the risks remain,” said Chris Pierson, CEO of cybersecurity firm BlackCloak.
Rep. Raja Krishnamoorthi, a co-author of the TikTok divestment law, expressed frustration at the delay, saying, “No more excuses. It’s time to comply with the law and save TikTok now.” For TikTok’s 170 million American users and thousands of content creators, the uncertainty has been exhausting. Popular creator Terrell Wade, known online as @TheWadeEmpire, said, “Every time a new deadline pops up, it starts to feel less like a real threat and more like background noise… I just hope we get more clarity soon.”
Investors Lined Up, But Approval Remains Elusive
Major U.S. investors, including Susquehanna International Group and General Atlantic—both of whom sit on ByteDance’s board—have been leading the discussions on the new U.S. entity. The plan reportedly includes a 120-day closing period to finalize the financing and paperwork. Walmart, once rumored to be involved, has denied any active participation.
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Despite significant progress, the lack of a formal agreement and Beijing’s sudden resistance have cast doubt on the deal’s future. As Trump’s administration sets a new mid-June deadline, both political and business leaders face increasing pressure to resolve the impasse—and fast.