A proposed deal to separate TikTok’s U.S. operations into a new American-led company has hit a wall after signals from China indicated it would not approve the transaction. This setback follows former President Donald Trump’s recent announcement of steep new tariffs on Chinese imports, escalating tensions between the two nations once again.
According to insiders familiar with the matter, the spin off deal nearly finalized just days ago would have created a U.S.-based company largely owned and run by American investors. Parent company ByteDance would have retained a stake of less than 20%, effectively complying with U.S. law mandating limited Chinese ownership.
The agreement had already received green lights from ByteDance, its existing and potential new investors, and even the U.S. government. However, China’s government expressed opposition, with its embassy in Washington reaffirming its stance: China respects business rights but stands firmly against actions that undermine market economy principles.
The timing couldn’t be worse. Trump extended the deadline for ByteDance to divest TikTok’s American assets by 75 days, pushing it to mid-June. He cited the need for additional time to finalize the structure and gain all necessary approvals. On social media, Trump acknowledged that China was unhappy about the new round of tariffs, which now bring U.S. duties on Chinese imports to 54%. China swiftly retaliated, deepening the standoff.
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Despite the pushback, Trump stated that discussions with Chinese officials and TikTok are ongoing. “We don’t want TikTok to go dark,” he emphasized, adding that he hopes a solution can be reached through mutual cooperation.
Congress passed a law in 2024 requiring TikTok to cease U.S. operations unless a divestiture was completed by January 19. That deadline came and went without enforcement. The Justice Department later informed Apple and Google that they would not be required to remove TikTok from app stores, allowing downloads to resume.
Now in his second term, Trump is under pressure from lawmakers to uphold the law and secure a permanent resolution. Talks are ongoing between the White House and key American investors in ByteDance. Among those leading negotiations are Susquehanna International Group and General Atlantic, both of which hold seats on ByteDance’s board.
Sources indicate the new plan involves spinning off TikTok’s U.S. operations into a standalone company with greatly reduced Chinese ownership. If approved, this could save TikTok from a U.S. ban and place it firmly under American control.
One rumored participant, Walmart, has denied interest in joining the investor group, pushing back against earlier reports.
For now, the future of TikTok in the U.S. remains uncertain—caught in the middle of geopolitical friction and commercial interests. With millions of American users at stake, the clock is ticking toward the new June deadline.
