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In the end, it was Donald Trump, the guy who wanted to save TikTok, who may well totally kill the short-video app from remaining in the US, On The Money has learned.
On Wednesday, Trump hit China, the very country that controls TikTok, with a 145% tariff on all imported goods because it “imprudently decided to retaliate against the United States” with an 84% tax.
With Trump now singling out just China for his trade war while pausing it for the rest of the world, the grueling TikTok negotiations have come to a standstill that will likely be difficult to overcome, people with direct knowledge of the matter say.
The reason is that the TikTok deal isn’t a simple M&A transaction. It’s closer to a geo-political, multi-layered boondoggle.
The app, technically owned by Chinese tech company Bytedance but controlled by Bejing, always needed approval from the Communist regime to be sold to a new company with majority US ownership.
Trump’s U-turn on reciprocal tariffs Wednesday that put the trade war on pause for the entire world except China is making a deal all but impossible, sources told On The Money.
“The Chinese don’t like losing face in public, so this deal is dead,” said one Wall Street executive with direct knowledge of the negotiations.
Another person involved in the discussions said, “Now they (the Chinese) won’t sell. That’s for sure.”
Trump himself was only a bit more sanguine when asked Wednesday how the China-trade contretemps will impact a TikTok deal.
“We’re going to have to wait to see what’s going to happen with China,” he said.
TikTok’s future in the US has been in limbo since Trump took office in January.
His first 75-day extension ended last week without a deal in place, so Trump enacted another 75-day extension. That means TikTok can still operate in the US as deal team members – big institutional investors, the White House and the Chinese — can finalize a structure that relinquishes Chinese control of TikTok but in a way that Bytedance and the Chinese government can live with.
Another issue throwing doubt on TikTok’s survival in the US is that it may be legally difficult for Trump to keep extending that all-important deadline to comply with the law.
Meanwhile, if some type of trade deal with China is reached, Chinese President Xi may not want to do the Trump administration a solid and agree to terms since TikTok will remain globally important even if it’s banned in the US.
“Is Trump just going to keep issuing extensions? Maybe, but that might not be legal, and Xi doesn’t seem to be in the mood to strike a deal on TikTok given what happened Wednesday,” said the Wall Street executive with knowledge of the negotiations.
The Chinese wanted a minority stake in the new US company; they also don’t want to sell TikTok’s crown jewel – its technology, the algorithm that funnels videos based on preferences to users, which lawmakers claim can be used to spy on US citizens.
The Chinese have long denied the spying issue, but US lawmakers remain concerned even with the new structure over whether it provides enough protection from alleged spycraft. That’s one reason it took so long to come up with a structure that satisfied all the competing constituencies.
TikTok seems small potatoes given the considerable issues that both sides need to iron out from tariffs to various other trade barriers. Treasury Secretary Bessent said the administration is weighing delisting Chinese stocks from US exchanges, which will add more fuel to the trade inferno.
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