On the Radar: U.S. and China Try to Untangle the TikTok Question

The United States and China have agreed on a framework that could see TikTok’s U.S. operations shift from Chinese parent company ByteDance to an American company. The deal, reached during trade talks in Madrid on Monday, is the latest step in a long-running saga that has stretched across two presidencies, multiple court battles, and repeated deadline extensions.

But this is about more than just a corporate takeover. The negotiations show how Washington and Beijing now treat social media platforms as strategic assets tied to national security, trade, and cultural influence.

From ByteDance to “Who?”

Treasury Secretary Scott Bessent confirmed in Madrid that TikTok would “switch from being owned by Chinese company ByteDance to being owned by a U.S. company”. It is not yet clear which firm will take over, though Oracle, which has close political ties to President Donald Trump, has been widely tipped.

For Bessent, the issue is simple.

“They’re interested in Chinese characteristics of the app, which they think are soft power. We don’t care about Chinese characteristics. We care about national security," he said during the Madrid briefing.

In other words, China sees TikTok as a soft power tool, while the U.S. sees it as a security risk.

A Saga of Laws, Deadlines, and Extensions

In 2024, Congress passed the Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA), which required TikTok to be sold on security grounds. The Supreme Court upheld the law, forcing ByteDance to either divest or face a ban in the U.S.

But enforcement has been repeatedly delayed. Trump, who first went after TikTok during his first term, has now extended deadlines several times since returning to office. The current extension expires this week, though officials are already signalling another 90-day reprieve to allow more time.

Even if Trump and Xi agree, Congress will need to approve the deal, adding another layer of uncertainty.

Trump and Xi on Friday and Beyond

Trump has suggested on Truth Social that the deal could be confirmed after his call with Chinese President Xi Jinping on Friday, describing U.S.–China ties as “very strong.” Chinese trade envoy Li Chenggang echoed that optimism, calling the Madrid talks “candid” and “in-depth”.

Negotiators have also pointed to a possible Trump–Xi summit at the Asia-Pacific Economic Cooperation forum in South Korea next month, or even a separate meeting in the United States. This places TikTok at the centre of a wider diplomatic stage where technology, trade, and politics all collide.

The deal also comes as the U.S. pushes other countries to impose tariffs on China over its imports of Russian oil, an issue that was briefly discussed in Madrid. Experts warn against assuming the deal is final until Trump and Xi speak directly.

The Algorithm Question

The biggest sticking point is TikTok’s recommendation algorithm, the system that powers the app’s global success. Washington wants it under U.S. control, while Beijing insists it falls under Chinese export control laws.

James Palmer, writing in Foreign Policy’s China Brief, noted that if TikTok’s U.S. arm continues to rely on ByteDance’s algorithm, “China would get the best of both worlds: effectively complying with the law while keeping control over the content that U.S. users consume”.

Palmer also argued that Trump is less focused on banning TikTok altogether and more interested in reshaping it into a platform friendlier to his administration, with Oracle and other allies in a strong position to benefit.

A Deal Within a Larger Trade Puzzle

U.S. Trade Representative Jamieson Greer described the Madrid outcome as “remarkable,” saying negotiators had been able to quickly narrow the issues to a workable conclusion. But he also pointed out that disputes over critical minerals and magnets remain unresolved and will feature in future talks.

At the same time, Beijing launched an antitrust probe into U.S. chipmaker Nvidia over its 2020 Mellanox acquisition. Bessent called the timing poor, but noted it fit a familiar pattern. In 2023, China banned some Micron products in a similar move.

This shows that TikTok is not a stand-alone case but part of a wider pattern of U.S.–China tension over technology, trade, and supply chains.

Soft Power and Political Influence

TikTok is also deeply embedded in U.S. cultural and political life. The app has been a hub for activism, satire, and campaigning, with internal data in 2024 showing pro-Trump content outpacing pro-Biden content. As Palmer observed, Trump’s interest lies not only in security but also in “turning [TikTok] into a platform that is more friendly to his administration.”

Outside the U.S., TikTok has been linked to the rise of far-right narratives in Europe, including in German state elections and campaigns in Poland, Sweden, and France. This highlights its role as a powerful influence tool across democracies.

What This Means for New Zealand and Asia

For Asia–Pacific countries like New Zealand, the TikTok debate highlights three key points:

• Technology as a strategic asset: Both the U.S. and China now treat data, algorithms, and platforms as matters of national security. For New Zealand, which relies on China for trade but values open digital markets, this raises questions about data sovereignty and algorithm oversight.

• Trade and technology go hand in hand: As the Madrid talks showed, TikTok’s fate was linked to tariff and technology discussions. This signals that trade concessions and digital governance are becoming inseparable.

Soft power competition: If TikTok splits into separate U.S. and global versions, Beijing’s influence may shrink in America but remain strong elsewhere. This could affect how narratives flow across the region and what New Zealand users see online.

What Next for the TikTok Deal?

The immediate focus is Friday’s Trump–Xi call, which will decide if the Madrid framework becomes a binding agreement. U.S. officials say the broad outlines are set: American ownership, U.S.-based data storage, and an American-led board. But the hardest issues remain.

Control of the algorithm is at the top of the list. Washington wants it cut off from Beijing’s reach, but China has labelled it export-controlled, making a full transfer unlikely. A licensing model has been floated, but critics fear it would leave Beijing with indirect influence. Even if the two leaders sign off, the deal still needs Congress’s approval, and some lawmakers are pushing for complete separation from ByteDance.

The timing also matters. The current deadline expires this week, with Bessent hinting at another 90-day extension. And TikTok is not the only issue in play. The Madrid talks also touched on critical minerals, magnets, and tariffs, which are likely to resurface at APEC in Seoul next month or at a possible Trump–Xi summit.

As Usha Haley of Wichita State University noted, for Beijing “the signing of a deal is the beginning, and not the end, of any negotiations.” The coming weeks will show whether TikTok becomes an example of compromise or the next flashpoint in an escalating U.S.–China rivalry.

-Asia Media Centre