How China and Tariffs Upended Trump’s TikTok Negotiations
Last Wednesday, the Trump administration believed it had a plan to save TikTok.
ByteDance, TikTok’s Chinese owner, along with some of its U.S. investors, and officials in Washington had coalesced around a new ownership structure for the popular video app, four people familiar with the situation said. According to two people, ByteDance told the White House that Beijing was comfortable with the general structure. Two people said that ByteDance informed the White House that Beijing approved of the general structure. A copy of the draft executive order that outlined the major points of the deal circulated by Thursday morning. ByteDance called The White House to tell them that the Chinese government wouldn’t allow the TikTok agreement to proceed after Mr. Trump announced the tariffs. On Friday, he paused enforcement of the federal law, extending the deadline for a TikTok deal into mid-June.
“The report is that we had a deal, pretty much, for TikTok, not a deal but pretty close, and then China changed the deal because of tariffs,” Mr. Trump told reporters Sunday aboard Air Force One.
The standstill highlights how the video app is mired in a geopolitical tussle between the United States and China over trade and tech supremacy. It also highlights China’s influence over TikTok in the United States and raises questions about whether or not a deal will be reached. “TikTok has kind of been the mouse that got caught underfoot between these two elephants.”
The Chinese Embassy in Washington, TikTok and ByteDance didn’t respond to requests for comment. The White House directed The Times to Mr. Trump’s post on Truth Social, announcing the extension of the debate over the application. The tentative terms of the agreement stated that new investors would own 50% of a new American TikTok company. Two people with knowledge of this matter said that current investors would own 30% and Chinese owners less then 20%. Three people with knowledge of this matter said that private equity giants such as Blackstone and Silver Lake along with venture capital firm Andreessen Horowitz had considered taking a stake. The proposal was detailed in a long and detailed document for potential investors. They said that certain potential investors considered any deal to be conditional and subject to the due diligence required for any large transaction. Two people familiar with the situation said that the administration’s chief negotiators did not discuss the issue with the Chinese government directly, but instead relied on ByteDance’s understanding of Beijing’s position. ByteDance thought that the Chinese government would be comfortable with the Washington structure before the president announced tariffs last week. Even before the tariff announcement there was no guarantee Beijing would give its formal or informal approval. China initiated retaliatory tariffs after Mr. Trump’s announcement, prompting the president to warn on Monday that he would impose additional tariffs of 50 percent on the country if it persisted.
Mr. Trump has repeatedly suggested that he would consider lowering tariffs on China in exchange for its approval of a TikTok deal.
Leveraging tariffs for the negotiations is “really kind of a remarkable effort to coerce a sale of a foreign company,” Mr. Chander said.
But the trade war may still be underway in June, he said, adding: “We may well find ourselves back in Groundhog Day 75 days from now unless the tariffs have been resolved.”
TikTok has maintained for the better part of a year that it is not for sale.
On Friday, ByteDance acknowledged for the first time that it had been involved in negotiations with the U.S. government over the app’s future — but said any decision was ultimately in another party’s hands.
“There are key matters to be resolved,” a spokesperson for ByteDance told reporters in an email. ByteDance’s spokesperson told reporters in an email that there were still key issues to be resolved.
