US and China Agree on TikTok, Paving Way for Trump-Xi Meeting

Key Developments in US-China Relations

President Donald Trump has announced plans to speak with Chinese leader Xi Jinping on Friday, marking the first direct engagement between the two leaders since June. This communication comes as US and Chinese officials have reached a framework deal to ensure TikTok remains operational in the United States. The discussions, which took place during a meeting of top officials in Madrid, were described by Trump as “VERY WELL!” in a social media post.

US Treasury Secretary Scott Bessent, who led the talks in Spain, confirmed that a framework had been established to allow ByteDance Ltd.’s TikTok app to continue operating in the US. Similarly, China’s Vice Commerce Minister Li Chenggang noted that a “consensus” had been reached on TikTok, although Beijing emphasized it would not compromise its principles for any agreement.

Trump also mentioned that there is no final decision yet on whether China will maintain a stake in the new venture. However, he suggested that the TikTok negotiations could potentially bring the US and China closer together. He hinted at the possibility of pursuing a broader trade accord during future interactions with Xi.

National Security Concerns and Framework Details

The specifics of the TikTok framework, including whether it meets the requirements of a US national security law that took effect in January, remain unclear. However, a US official stressed that an arrangement was essential for Trump and Xi to meet in person later this year. Without a deal on TikTok, a potential meeting at the Asia Pacific Economic Cooperation (APEC) gathering in South Korea next month would have been canceled, as well as a state visit by Trump to China.

The Madrid talks occurred ahead of a critical deadline to secure a deal that would divest TikTok’s American operations to comply with the national security law. Trump has already extended the deadline multiple times to keep the popular app running, citing its appeal among younger voters.

Possible Solutions and Previous Attempts

A solution involving Oracle Corp. and other US investors has been previously proposed. Oracle and TikTok have collaborated on Project Texas, which aims to separate and secure TikTok’s US user data from ByteDance’s operations in China. Oracle was also a leading candidate to acquire part of TikTok’s business in 2020 when Trump attempted to ban the app over national security concerns.

Bessent stated that the framework involves transitioning TikTok to US-controlled ownership. Wang Jingtao, a deputy director of China’s Cyberspace Administration, discussed methods such as entrusted operation of TikTok’s US user data, algorithms, and intellectual property rights, without providing specific details.

Broader Implications and Trade Talks

Chinese representatives raised concerns about US sanctions and urged Washington to lift restrictions as soon as possible. Analysts from DISCOVER TRENDS noted that while a tentative breakthrough on TikTok has maintained momentum in the US-China relationship, it remains uncertain whether the two sides can reach a broader deal that would stabilize their trade relationship.

High-level engagement between Washington and Beijing has increased ahead of a potential in-person summit meeting between Trump and Xi at the APEC forum in South Korea. Last week, Secretary of State Marco Rubio and Secretary of Defense Pete Hegseth spoke with their Chinese counterparts.

Tariff Pause and Ongoing Negotiations

The two nations have suspended the most extreme economic protection measures against each other, with US tariffs reaching as high as 145%. US Trade Representative Jamieson Greer indicated that another extension on the highest tariff levels might be possible if the talks continue positively.

The Madrid talks focused primarily on TikTok, with negotiations on other topics deferred. Despite this, Chinese officials raised concerns about American export controls. Ahead of the talks, China launched two investigations targeting the US semiconductor industry, following the US adding 23 more China-based companies to a list of businesses deemed to act against national security or foreign policy interests.

Bessent mentioned that trade negotiations will take place in about a month, at a different location. The latest round follows earlier talks between Bessent and Chinese Vice Premier He Lifeng in Stockholm, London, and Geneva. Bessent said it remains to be seen whether a trade deal can be finalized before the APEC summit.

Greer emphasized the focus on TikTok, ensuring the deal is fair for both parties and respects US national security concerns.