In a surprising twist, plans to spin off TikTok’s U.S. operations have hit a wall — and it’s not a technical glitch but geopolitical tension. According to insider sources, the Chinese government has raised objections to the deal following President Donald Trump’s announcement of sweeping new tariffs, effectively freezing progress on one of the most anticipated tech transactions of the year.
The Trump administration had previously demanded that ByteDance, TikTok’s parent company, sell its U.S. assets to a non-Chinese buyer or face an outright ban. Originally set to take effect in January, that deadline was extended by another 75 days last week, giving both sides more time to finalize a deal. But just when the structure of the agreement appeared to be nearly complete, China signaled it might not approve the move.
Under the proposed terms, TikTok’s U.S. operations would become a separate entity headquartered in the United States, majority-owned and managed by American investors. ByteDance would retain less than a 20% stake, in compliance with U.S. law. The deal had secured backing from ByteDance, existing and new investors, and even received a nod from the U.S. government — until China’s intervention put everything on hold.
ByteDance confirmed the stalemate in a statement on WeChat, saying that while discussions are ongoing, both parties still differ on several key points. The Chinese Embassy in Washington echoed its usual stance, emphasizing that it opposes any measures that undermine market principles or the legal rights of Chinese businesses.
The deadlock seems closely tied to Trump’s recent decision to slap new tariffs on Chinese imports, raising them by 34% — bringing the total tariff burden on Chinese goods to 54%. China retaliated almost immediately, casting doubt on any potential goodwill needed to finalize the TikTok agreement. Trump, however, has indicated that he might ease those tariffs if the deal can be completed.
On social media, Trump said that four different groups were in talks regarding a possible purchase of TikTok’s U.S. business. Though he didn’t name the entities, major players like Susquehanna International Group and General Atlantic are reportedly leading negotiations, with Walmart denying any current involvement.
The proposed plan involves spinning TikTok off into a new American-based company, drastically limiting ByteDance’s ownership. The goal? To comply with U.S. regulations and protect the app from being banned. TikTok has over 170 million users in the U.S. — making its fate a major concern not just for users, but for the broader digital economy.
Congress had passed the original divestiture law last year, citing national security concerns that TikTok could be used by the Chinese government for surveillance or covert influence. Although enforcement of the law has been inconsistent, pressure continues to mount from lawmakers urging Trump to see it through.
The new deadline to close the deal is now set for mid-June. Whether a resolution can be reached remains uncertain, but one thing is clear: TikTok’s future in the United States hangs in the balance — entangled in the complex web of global politics and digital power.
