China has put plans to spin off TikTok’s US assets on ice amid Donald Trump’s trade war.
A deal to turn TikTok’s operations into a new company in the US had been largely finalised by Wednesday but it is now in limbo after China indicated it would not approve the transaction after the US president hit its exports with huge new tariffs on Wednesday.
The transaction would have turned TikTok’s US business into a company that was majority-owned by US investors, with its Chinese parent company ByteDance holding a minority stake of less than 20 per cent.
It had been approved by investors, ByteDance and the US government, but now China has signalled that it will refuse to sign off on the deal, according to Reuters.
The delay forced Mr Trump to announce a new extension to the deadline for ByteDance to divest on Friday.
China’s move follows Mr Trump’s announcement on Wednesday that he would hit China with a new 34 per cent “reciprocal” tariff, which will bring the US’s total charges on imported goods from China to more than 60 per cent.
Xi Jinping, the Chinese president, responded on Friday by announcing that China would hit US goods imports with a similar 34 per cent charge, a massive escalation that sent global stocks tumbling.
US Congress last year passed legislation demanding that ByteDance divest from the video-sharing app, which is used by 170 million Americans, or TikTok would face a national ban.
The original deadline to do so was in January, but when Mr Trump took office he granted ByteDance a 75-day extension, which was due to expire this Saturday. Mr Trump extended this on Friday by another 75 days.
Mr Trump wrote on Truth Social: “The deal requires more work to ensure all necessary approvals are signed, which is why I am signing an executive order to keep TikTok up and running for an additional 75 days.
“We hope to continue working in good faith with China, who I understand are not very happy about our reciprocal tariffs (necessary for fair and balanced trade between China and the USA!).”
A ByteDance spokesman said: “ByteDance has been in discussion with the US government regarding a potential solution for TikTok US.
“An agreement has not been executed. There are key matters to be resolved. Any agreement will be subject to approval under Chinese law.”
China’s move will be a blow to Mr Trump who had signalled that he would reduce the tariff burden on Chinese goods if Beijing gave ByteDance the green light to spin off its US assets.
Mr Trump had told reporters on Thursday: “We have a situation with TikTok where China will probably say we’ll approve a deal, but will you do something on the tariffs. The tariffs give us great power to negotiate.”
Discussion about this post