A proposed agreement to restructure TikTok’s U.S. operations fell through after President Donald Trump imposed new reciprocal tariffs on China, according to a report released Friday. The Associated Press, citing a source close to the talks, revealed that the deal collapsed when Beijing pulled support due to escalating trade tensions.

The original plan involved creating a new U.S.-based entity to manage TikTok’s American operations. Under the arrangement, American investors would hold a majority stake, while Chinese parent company ByteDance would retain a minority share. Negotiators from both sides were reportedly nearing an agreement until Trump announced a sweeping 34% tariff on Chinese imports.

Following the tariff announcement, ByteDance representatives allegedly contacted the White House, informing them that the Chinese government would no longer approve the deal unless both countries resumed trade negotiations. The move signaled a direct linkage between ongoing tech-sector business arrangements and broader trade policy disputes between Washington and Beijing.

Despite the breakdown in talks, President Trump expressed optimism. Earlier on Friday, he announced plans to sign an executive order extending the deadline for finalizing the TikTok deal by 75 days. “Tremendous progress has already been made,” Trump stated, suggesting that a resolution may still be possible if trade tensions ease.

The failure of the deal reflects the growing entanglement of technology and geopolitics. TikTok, with its massive user base in the United States, has been under scrutiny over data security and national influence concerns. The Trump administration has pushed for a U.S.-controlled version of the platform to mitigate perceived risks.

With no new timeline for resuming negotiations, the future of TikTok’s operations in the U.S. remains uncertain. The situation underscores how trade policy decisions can ripple into corporate transactions, particularly when they involve companies caught in the geopolitical divide between the United States and China.