• A phone call between Xi Jinping and Donald Trump is seen as a watershed moment for finalizing a pact to keep TikTok operational in the US.
  • The proposed deal involves licensing TikTok's algorithm to a new, majority American-owned entity with US user data housed overseas.
  • Investors are watching for broader outcomes, including eased tariff tensions and a potential thaw in US-China tech relations.

A Path Forward for TikTok

In a call that could reshape US-China tech relations, leaders Xi Jinping and Donald Trump held what was described as pragmatic and positive discussions, principally focused on finalizing a complex agreement for social media platform TikTok. The deal, which has been under negotiation, is widely viewed as the key to allowing the Chinese-owned app, used by 170 million Americans, to continue its US operations after facing threats of a ban or forced divestiture.

According to people familiar with the matter, the underlying framework would see Beijing-based parent company ByteDance license TikTok’s core algorithm to a new, majority American-owned entity. A critical component of the agreement requires all US user data to be housed on servers outside of China, a move designed to directly address longstanding US national security and data privacy concerns that have fueled legislative and executive actions against the app.

Broader Market and Trade Implications

The high-stakes conversation, which helped buoy US futures, extended beyond the immediate TikTok resolution. Investors are closely monitoring for signs of eased trade tensions, including the potential for China to resume significant purchases of US agricultural products like soybeans. In return, the US is considering a rollback of certain tariffs, such as the 20% levy on Chinese fentanyl, according to those briefed on the discussions.

While the TikTok deal was the centerpiece, the leaders also touched on other sensitive geopolitical flashpoints, including Taiwan and secondary sanctions related to Russian oil purchases. The issue of US restrictions on Chinese access to advanced technologies, notably high-end chips from companies like NVIDIA, was also on the agenda, though no immediate breakthroughs were announced. The call lays the groundwork for deeper diplomatic engagement, with discussions underway about a potential in-person summit in Korea this October and even a future Trump visit to China.

Efforts to reach spokespeople for both governments for additional comment were not immediately successful. For the millions of US-based TikTok users and creators, the agreement would avert a major platform disruption, preserving jobs and online communities that have grown reliant on the app. The development reflects a broader, ongoing effort by Western nations to regulate foreign-owned social platforms, balancing economic interests with national security imperatives.