China Turns its Back on Approved TikTok Deal After Trump’s New Tariff Hike

The White House’s push to force a US divestiture of TikTok has reportedly unravelled—at least for now—after Beijing refused to approve the proposed deal.

The breakdown appears to stem from escalating trade tensions, as China reacted sharply to former President Donald Trump’s recent tariff hikes on Chinese imports, calling them disrespectful.

The divestiture agreement, which would have shifted majority control of TikTok’s US operations to American investors while allowing ByteDance to retain a minority stake, was finalised and on track for a public announcement just ahead of a legal deadline.

However, the deal began to falter last week after Trump imposed an additional 34% tariff on Chinese goods, citing Beijing’s “continued abuse of global trade norms.”

The following day, ByteDance notified the White House that Chinese authorities would block the transaction.

In response, Trump signed an executive order extending the divestiture deadline by 75 days, pushing it to 19 June

He then escalated matters further by raising tariffs on Chinese imports to 125%, accusing Beijing of “disrespecting global markets,” while simultaneously reducing tariffs on other countries to 10% for a 90-day negotiation window.

President Xi Jinping and his administration’s decision to halt the TikTok deal is widely seen as a retaliatory move—an attempt to assert leverage in response to Trump’s aggressive trade policies.

Bill Reinsch, a former Commerce Department official now at the Center for Strategic and International Studies, noted:

“They’re using Trump’s own strategy against him. They’re showing they can retaliate without harming themselves while still targeting a political priority for the White House.”

Analysts suggest Trump’s use of tariffs as a negotiating tactic has blurred the line between diplomacy and economic warfare.

TikTok, with over 170 million US users, remains at the center of the standoff.

The administration maintains the platform poses a national security risk due to its Chinese ownership and has insisted on a US-led acquisition as a condition for continued operations.

Vice President JD Vance, leading the stalled negotiations, now faces the challenge of reviving the deal.

One advisor close to the talks described the situation as a “waiting game.”

Meanwhile, some experts warn that Trump’s hardline approach may be giving Beijing the upper hand.

Sarah Kreps, director of Cornell University’s Tech Policy Institute, said:

“This national security imperative to divest from ByteDance is now giving China leverage at the same time that Trump is trying to put the screws to them with tariffs.”

Adding:

“When ByteDance then withdraws from consideration of this deal, it’s not surprising. They now have the bargaining leverage, because this TikTok deal cannot go forward unless they agree to it.”

Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, stated:

“Trump has gone so overboard with the tariffs and has gotten into such a mano a mano battle with President Xi [Jinping] that it’s hard for me to see that there’ll be some happy resolution from Trump’s standpoint on TikTok.”

Economist Gary Hufbauer argues that China is in a stronger bargaining position, with the US more exposed to inflation and market volatility, while China’s relatively modest exports to America may be easier to reroute.

He noted:

“The balance of political pain will be much heavier in the U.S. than in China. That’s going to become evident, I think, in the weeks ahead. Maybe the way they will deal with TikTok is just to postpone any decision. Already Trump has postponed the law, and I guess he could do it again. … So, maybe it goes on ice as opposed to a clear denial.”

Critics Lambast Trump’s TikTok Extension

Legal and political scrutiny is mounting over President Trump’s latest extension of the TikTok divestiture deadline.

Senator Mark Warner (D-Va.), who championed last year’s divest-or-ban legislation, expressed “deep reservations” in a letter to the president on Monday.

He argued the second 75-day delay violates the law, which permits only a single 90-day extension.

Warner also questioned whether the proposed deal meets the legal standards required to sever ByteDance’s influence over TikTok’s US operations, warning that any connection between tariff negotiations and the divestiture process would be especially troubling.

Senator Chris Murphy (D-Conn.) echoed the criticism, calling the extension “100 percent illegal.”

Murphy wrote in a Saturday post on the social platform X (formerly known as Twitter):

“Trump seems to be biding time to work out a deal where one of his political allies takes over TikTok and turns it into a MAGA propaganda machine. Rumors are that China will stay in partial control.”

Across the aisle, Representative John Moolenaar (R-Mich.), chair of the House Select Committee on the Chinese Communist Party, insisted that any agreement must ensure ByteDance has no control over the platform’s future.

Moolenaar wrote in an op-ed for the National Review last month:

“A deal that keeps ByteDance in control wouldn’t just miss the mark on addressing national security concerns — it would directly violate the law. There’s still time for a ‘deal of the century’ — but only one that fully adheres to the law. ByteDance must divest, plain and simple. If that doesn’t happen, TikTok’s days in America are numbered.”

The convergence of Trump’s tariff strategy with national security concerns surrounding TikTok underscores broader questions about the administration’s approach.

Jennifer Huddleston, a senior fellow in technology policy at the Cato Institute, noted that the overlap reveals deeper tensions around trade, tech, and foreign influence in the digital age.

She pointed out:

“This represents in some ways the debate over a TikTok divest-or-ban [law] has been about TikTok, but in many other ways, it’s actually been a bigger issue. That includes both a bigger issue about the overall U.S.-China relationship, as well as a bigger debate over technology companies and particularly social media.”

She added:

“Whatever happens to TikTok at the end of this 75 days or at the end of the next 75 days, this is actually both a much bigger law, as well as a much bigger conversation to have.”

Despite Setbacks, White House Optimistic on TikTok Deal

Despite escalating trade tensions, President Trump remains publicly optimistic about the future of the TikTok deal.

Trump told reporters in the Oval Office on Wednesday:

“We have a deal with some very good people, some very rich companies that would do a great job with it. It’s on the table, very much. But we’re going to have to wait and see what happens with China.”

But on Capitol Hill, scepticism is mounting. Lawmakers from both parties have questioned the legality of the president’s extensions and raised concerns about potential security risks tied to lingering Chinese ownership.

Senators Mark Warner and Ed Markey contend that Trump lacks the legal authority to issue multiple deadline extensions, and Warner further argues that the proposed deal fails to meet the statutory criteria for severing ByteDance’s control.

Senator Tom Cotton, chair of the Senate Intelligence Committee, went a step further, warning that any US investors involved in a compromised TikTok agreement should not expect congressional protection.

Cotton expressed:

“To any American who wants to invest in some half-assed TikTok deal, Congress will never protect you from going into business with Communist China.”

Meanwhile, an effort by Markey to push the divestment deadline to October was blocked in the Senate on Wednesday.

According to the legislation passed last year, TikTok was required to shut down its US operations by 19 January unless ByteDance divested its American assets.

Since then, President Trump—who began his second term on 20 January—has twice extended enforcement deadlines in an effort to keep negotiations alive.