TIKTOK, TRADE, AND LEVERAGE: WHY THE DIVEST-OR-BAN FIGHT WON'T STAY CONTAINED

TikTok’s U.S. future has become a proxy battle over how Washington and Beijing intend to manage digital power.

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What began as a narrow question about data handling now sits inside a broader struggle over technology access, capital flows, and export controls—areas where each side has learned to use policy as leverage. The latest warnings from hedge fund manager Scott Bessent, a former Soros lieutenant who now runs Key Square Group, capture the shift: a forced divestiture, he argues, would not end the dispute so much as relocate it to other pressure points in the trade relationship.

DIVESTITURE AS POLICY SIGNAL, NOT END STATE

Congressional momentum behind a divest-or-ban framework reframes TikTok as industrial policy rather than a consumer-app dispute. Supporters cite U.S. national security laws and Chinese statutes that could require cooperation with state authorities, arguing that ByteDance's ownership structure is incompatible with American oversight. TikTok points to its U.S. data segregation and third-party hosting as mitigations, but the debate no longer hinges on technical compliance; it turns on whether governance can be credibly insulated from foreign influence.

China’s Commerce Ministry has already defined core elements of TikTok’s recommendation engine as controlled technology. That stance matters because a sale without the algorithm would dilute the asset that makes the platform commercially viable. In practice, export controls transform a simple divestiture into a strategic question: either Washington accepts a partial asset, or Beijing approves an export that sets a precedent for other outbound transfers. Bessent’s read is unsentimental. Algorithms, like advanced chips, are leverage. If the United States moves first on corporate control, China can reply on the technology layer where it holds legal veto power.