According to an AP source, China halted the TikTok deal after Trump announced extensive tariffs.

A source familiar with the negotiations who spoke to The Associated Press said that after former President Donald Trump announced sweeping tariffs on Chinese goods in September 2020, China reportedly backed away from a potential deal that would have allowed TikTok to continue operating in the United States. The new information sheds new light on the tensions that existed behind the scenes and ultimately stalled efforts to restructure TikTok's operations in the United States due to concerns about national security. The ByteDance, a Beijing-based company that owns the popular video-sharing app, came under intense scrutiny from the Trump administration, which wanted to either force a sale to an American company or ban it completely. TikTok's Failed Deal ByteDance was asked to sell TikTok's U.S. operations to an American company in 2020 by the Trump administration due to concerns that the Chinese government could access user data and influence content. Oracle and Walmart emerged as the most likely candidates to acquire a stake in the newly established TikTok Global, based in the United States, which would be in charge of the app's domestic operations. When Trump announced new tariffs on $200 billion worth of Chinese imports in the middle of September, the negotiations appeared to be getting closer to a conclusion. The move was part of a larger trade war his administration was fighting with China, which had already seen tariffs on electronics and agricultural goods go up. The AP source says that Chinese officials thought the new tariffs were bad faith and stopped working together on the TikTok deal right away. Beijing viewed any forced sale of TikTok as an unfair seizure of a Chinese tech asset, so it had been reluctant to approve it. The additional tariffs further strained relations, leading Chinese regulators to withhold necessary approvals for the transaction.
Negotiations are sunk by geopolitical tensions. The fact that the TikTok deal fell apart demonstrates how wider tensions between the United States and China had an impact on what was initially framed as a matter of national security. To put pressure on ByteDance, the Trump administration used the Committee on Foreign Investment in the United States (CFIUS), but China's retaliatory actions prevented a resolution. “China was never going to let one of its most successful tech companies be dismantled under U.S. pressure,” said Paul Triolo, a technology policy expert at the consulting firm Albright Stonebridge. “The tariffs were the final straw—they signaled that the U.S. wasn’t negotiating in good faith.”
After legal challenges stopped Trump's attempt to ban TikTok, the company continued to operate in the United States despite the stalled deal. Later on, the Biden administration took a different approach, putting more of an emphasis on data security reviews as opposed to a direct forced sale. Continuous Examination of TikTok TikTok remains a contentious issue in U.S.-China relations even without a ban. Concerns have been expressed by lawmakers from both parties regarding its data collection practices and the possibility of ties to the Chinese Communist Party. In April 2024, President Joe Biden signed a bill that could ban TikTok unless ByteDance sells its U.S. operations within a year—a move that has reignited tensions with Beijing.
As a result of China's repeated declarations that it would oppose any forced divestiture, another conflict may be imminent. In the meantime, TikTok has taken steps to store American data on servers in the United States and has denied sharing user data from the United States with the Chinese government. What Comes Next? The deal that fell through in 2020 is a cautionary tale about how geopolitical tensions can make business negotiations difficult. TikTok's future is still uncertain due to the tech and trade rivalry between the United States and China. “The fundamental issue hasn’t changed,” said Samm Sacks, a cybersecurity policy fellow at Yale Law School. China will not tolerate what it considers to be bullying of its companies, and the United States wants assurances that TikTok is not a threat to national security. As the deadline for TikTok’s potential ban approaches, the app’s fate could once again hinge on the delicate balance between national security, corporate interests, and U.S.-China diplomacy.