A proposed deal to spin off TikTok’s U.S. operations has been put on hold, according to a Reuters report citing two sources. The delay comes after the Chinese government signaled it would not approve the agreement, following the imposition of new tariffs on China by U.S. President Donald Trump.
The original deal, approved in outline form on Wednesday, April 2, aimed to create a new U.S.-based company that would take over TikTok’s operations in the country. Under the agreement, the new company would be majority-owned and operated by U.S. investors. ByteDance, the Chinese parent company of TikTok, would retain no more than a 20 percent minority stake in the venture.
This structure had received backing from existing TikTok investors, prospective new investors, ByteDance, and the U.S. government. President Trump stated that his administration had made “tremendous progress” in securing a deal for the popular video-sharing platform. However, specific details about who was bidding for TikTok remain unclear.
Rising Tensions Impact Negotiations
Momentum toward finalizing the deal slowed considerably after the White House imposed a 34% tariff on Chinese goods earlier this week. The move triggered a retaliatory response from Beijing, escalating trade tensions between the two countries. These rising tensions appear to have influenced China’s willingness to approve the deal.
TikTok’s legal standing in the U.S. has also been uncertain. The platform was briefly blocked in the country in January. After assuming office, President Trump extended the ban for 75 days, reminds NIX Solutions. It was reported yesterday that this extension has been renewed for another 75 days. The ongoing nature of the ban adds further uncertainty to the platform’s future in the U.S. market.
As of now, neither ByteDance, the White House, nor the Chinese embassy in the U.S. have issued official statements regarding the suspension of the deal. Yet we’ll keep you updated as more information becomes available or if the situation changes.