TikTok US deal put on hold as China opposes tariffs
WASHINGTON/BEIJING (Reuters) – A plan to spin off TikTok’s US operations from parent company ByteDance has been put on hold after China reacted angrily to new tariffs announced by former President Donald Trump this week, two people familiar with the matter said.
On Friday, Trump gave ByteDance a 75-day deadline to sell TikTok’s US assets to a non-Chinese party – or face a ban that would take effect in January under a law passed in 2024.
The deal was nearly finalized on Wednesday, one of the sources said, with plans to move TikTok’s US operations to a new US-based company majority-controlled by American investors. ByteDance will still retain a stake of less than 20%.
However, China has blocked the deal following the announcement of higher tariffs from the US, which prompted Beijing to refuse to approve any deal.
ByteDance said on Saturday that “significant differences remain with the US government,” and stressed that “any deal will need to comply with approval processes under Chinese law.”
CHINA RESPONDS TO TRADE TENSIONS
A statement from the Chinese embassy in Washington stressed that the country “always safeguards the legitimate rights and interests of enterprises” and opposes “actions that run counter to free market principles.”
Earlier, the AP news agency cited sources as saying that the Chinese government had directly objected to the US forcing the sale of TikTok, especially in the context of the escalating tariff war between the two countries.
China now faces a total of 54% tariffs on its exports to the US, following a 34% increase announced by Trump this week. Beijing quickly retaliated with similar measures on Friday.
THE DEAL IS NOT DONE
“The deal needs more time to get the necessary approvals,” Trump said. But he still expressed hope for goodwill with China, although he acknowledged that “they are not happy with our tariffs.”
Trump also revealed that his administration is working with four different groups on a new deal involving TikTok, without naming them.
The current plan is for TikTok to spin off its US operations into a separate entity, reducing ByteDance’s ownership to less than 20% to comply with US law.
Among the investors leading the talks are General Atlantic and Susquehanna International Group, both of which have representation on ByteDance’s board. Walmart has denied that it would be part of the investment group.
PRESSURE FROM THE US CONGRESS
The law requiring ByteDance to divest TikTok in the US was passed last year with broad bipartisan support, based on concerns about national security and the potential for the Chinese government to exploit US user data.
President Joe Biden signed the law before leaving office, but Trump, who was re-elected, is now the one to implement it.
Some lawmakers are urging Trump to act decisively before the January 19 deadline. Meanwhile, the Justice Department has notified Apple and Google that the law has not been enforced, allowing TikTok to remain available on app stores.
Trump’s latest order sets a mid-June deadline for the deal to be completed, while negotiations are still being led by the White House.
“We don’t want TikTok to go away,” Trump said Friday. “We look forward to making a deal that will be beneficial to both parties.”