BREAKINGVIEWS-A TikTok deal may be good for US-China trade

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Robyn Mak

HONG KONG, Jan 22 (Reuters Breakingviews) - It's becoming clear that everything may be up for negotiation with President Donald Trump. That might not be a bad thing for China. The U.S. leader warned the People's Republic could face tariffs of up to 100% if Beijing does not approve a sale of TikTok, the video app owned by Chinese firm ByteDance. How such a deal would look is unclear, but it would be an easy way for both sides to show goodwill ahead of negotiations on thornier issues like trade.

On Monday, Trump signed an executive order - one of dozens - aiming to delay the Jan. 19 deadline imposed on ByteDance to sell its U.S. operations or face a ban. TikTok is supposed to go offline in the United States, where it boasts 170 million users, after the Supreme Court upheld legislation deeming the popular video app a national security threat. The Republican president further suggested the United States should be "entitled to get half of TikTok" and that he could put tariffs on China if it rejected a deal, which he described would be a "hostile act".

This may sound like the usual Trump bluster. After all, he repeatedly threatened 60% tariffs on all Chinese goods throughout his re-election campaign. Though he did not immediately follow through on his first day, he did say his administration is discussing a 10% punitive duty on the People's Republic as soon as Feb. 1, citing the country's role in the illegal fentanyl trade.

Still, now that the U.S. president has made explicit his involvement in TikTok's fate and linked it to tariffs and trade, the Chinese government will have an incentive to engage. Following Trump's remarks on Monday, the Chinese Foreign Ministry, which previously stated it would block a forced sale, responded by saying companies can make their own decisions - the first indication that Beijing would be open to a U.S. deal. Earlier this month, Bloomberg reported that Chinese officials were "evaluating a potential option" that involves Elon Musk acquiring TikTok - an option Trump said he was open to. The enterprise could be worth more than $100 billion, Breakingviews calculates.

A compromise on TikTok might pave the way for smoother trade talks. China wields a weaker hand this time around: the economy is sputtering and the country's failure to honour a promise to buy an extra $200 billion of American goods and services in 2020 means Beijing can use some goodwill ahead of negotiations. Besides, President Xi Jinping is more concerned with cultivating national champions in electric vehicles, artificial intelligence and semiconductors; ByteDance's addictive apps also go against the Chinese leader's distaste for screen time. A TikTok trade could be good for both sides.

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CONTEXT NEWS

U.S. President Donald Trump signed an executive order on Jan. 20 seeking to delay for 75 days the ban of video app TikTok, owned by Chinese company ByteDance. The app was slated to be shuttered on Jan. 19 on national security grounds.

Trump said that he "could see" the U.S. government taking a 50% stake in TikTok. He also warned that he could impose tariffs on China, as high as 100%, if Beijing failed to approve a U.S. deal with TikTok.

When asked about the app's restoration and Trump's desire for a deal, China's foreign ministry told a regular news briefing that it believed companies should "decide independently" about their operations and deals.

(Editing by Antony Currie and Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on MAK/
robyn.mak@thomsonreuters.com))