Trump and Xi Agree to Talk More. TikTok in U.S. Remains Unresolved.

President Donald Trump and China’s President Xi Jinping in 2017 in Beijing. (Thomas Peter / Getty Images)

President Donald Trump and Chinese leader Xi Jinping said they would meet in October. Unresolved for now: the future of tariffs and TikTok’s operations in the U.S.

A much-anticipated phone call between President Donald Trump and Chinese leader Xi Jinping on Friday resulted in the two leaders agreeing to talk more. Details on the future of U.S.-China trade—and the future of social media app TikTok in the U.S.—remained hazy in the wake of the call.

The leaders said they would meet at a regional economic confab in late October and characterized Friday’s discussion in a positive tone but appeared not to come to a resolution on a host of outstanding issues, including the signoff on a framework deal related to social media app TikTok.

“We made progress on many very important issues including Trade, Fentanyl, the need to bring the War between Russia and Ukraine to an end, and the approval of the TikTok Deal,” Trump said in a post on Truth Social on Friday.

Later in the day, Trump reiterated the deal’s approval while noting certain details still needed to be worked out, including those around the algorithm that drives TikTok’s recommendation engine. China’s apparent control of that algorithm for U.S. TikTok users pushed Congress to ban the app in 2024.

“It’s all being worked out,” Trump said in response to a question about the algorithm. “We’re gonna have very good control. We have Americans. These are American investors, all of them…And they’ll have control of it.”

Analysts dissecting statements from Trump and China on Friday noted a willingness by both sides to maintain the de-escalatory tone of the last couple months, but they noted some differences in each side’s communications. Trump mentioned future meetings in his social media post. The readout from the Chinese government didn’t mention similar meetings or a trip.

To Michael Hirson, head of China research for 22V, the takeaway was that a bigger deal between the U.S. and China may be further away—with a host of issues still standing between them.

“A Trump trip to China would have raised expectations for significant economic deliverables to justify a visit. Instead, the meeting in South Korea will likely be more of a placeholder while the two sides continue negotiations,” Hirson said.

China’s view of a TikTok deal also sounded less final than Trump’s account.

“The Chinese government respects the wishes of the company in question, and would be happy to see productive commercial negotiations in keeping with market rules lead to a solution that complies with China’s laws and regulations and takes into account the interests of both sides,” a statement from the Chinese Ministry of Foreign Affairs said.

“The U.S. side needs to provide an open, fair and nondiscriminatory environment for Chinese investors.”

Additional time needed for negotiations leaves the possibility of future complications. Russia’s actions in Ukraine—and Europe’s reaction—could complicate any chance of a U.S.-China deal, says Matt Gertken of BCA Research.

“Very negative news comes from Russian President Putin swatting away Trump’s olive branch and staging provocations against NATO boundaries,” Gertken says. That puts pressure on Europe to raise sanctions on Russia—and secondary sanctions that would hit China, which is the largest buyer of Russian oil.

While the U.S. penalized India with an additional 25% tariff for its purchase of Russian oil, it didn’t do the same for China. If Europe acts, Gertken says, the U.S. may need to match, thereby putting pressure on Russia to agree to a cease-fire in Ukraine. The risk: Any U.S. secondary sanctions or tariffs on China would reverse the tentative progress shown today in U.S.-China talks, he says.

“Anything that raises U.S. sanctions/tariffs on China and sets back the U.S.-China talks will act as a negative catalyst for an equity market that is ripe for a correction,” Gertken says.

Ultimately, TikTok is becoming a key part of the calculus.

“Xi sees that Trump wants TikTok and this can bring him to the table for a broader negotiation,” says Laila Khawaja, head of technology research at Gavekal, who adds that TikTok isn’t that important to Beijing.

ByteDance is a successful technology company that gets about a quarter of its revenue overseas—and less than 20% from TikTok in the U.S., where the platform is a major source of revenue for content creators and small businesses.

A framework agreement around TikTok, as reported by the Wall Street Journal, calls for a U.S. consortium including Oracle to own 80% of a U.S. version of the app, with the new company possibly licensing ByteDance’s technology and then re-creating the algorithm that has made the app so valuable, according to press reports. The data would be managed by Oracle, which has been in a partnership with TikTok to do so.

Such a licensing agreement could leave unanswered concerns around national security that led Congress to ban the current version of TikTok in the U.S., without new U.S. ownership. But analysts said that there is room for such a deal to go through if the president approves it.

Any deal would still need approval by the Chinese government, which has restrictions on the export of technology.

A TikTok deal could have broader impact still, including offering a path to revive the licensing deal Ford Motor had with battery maker CATL that was put on hold due to national security concerns, analysts say. But it’s unlikely, they say, that Chinese EV giant BYD would gain access to the U.S. market because it poses a threat to domestic auto makers.

Trump has voiced an openness to China investing in the U.S., but his America First Investment policy restricts such investments. In addition to a lifting of the restrictions on China’s access to technology, China also wants to see restrictions loosened on its inbound investments.

If the Trump administration takes that path, it could build on de-escalating tensions between the two geopolitical rivals. With stock indexes at record highs, it’s what the market is betting on.

Write to Reshma Kapadia at reshma.kapadia@barrons.com