The call, which began at 8 a.m. Washington time, was the first direct exchange between the two leaders in three months.

Earlier this year, Washington threatened to shut TikTok down unless its U.S. operations are transferred from Chinese parent company ByteDance to American ownership. 

Congress set a deadline of January 2025, though Trump has so far avoided enforcing it. He has admitted that banning the app outright could trigger a backlash among its millions of American users.

“I like TikTok; it helped get me elected,” Trump said on Thursday. “TikTok has tremendous value. The United States has that value in its hand because we’re the ones that have to approve it.”

Beijing, however, must sign off on any deal before it moves forward. Sources familiar with the talks say U.S. investors would take over TikTok’s American assets, but ByteDance would continue supplying the algorithm that drives the app’s powerful content recommendations. This unsettles U.S. lawmakers who argue that algorithmic control is inseparable from political influence.

“The platform may be American-owned, but if the algorithm is Chinese, the risk remains,” warned Senator Mark Warner, chairman of the Senate Intelligence Committee.

Trade and technology disputes

The TikTok talks are unfolding against a bigger economic fight. Since returning to office, Trump has raised tariffs on Chinese goods, some to levels not seen in nearly a century. Beijing retaliated with its own restrictions, leaving both economies struggling. 

The U.S. is battling high inflation and a record trade deficit with China, while China’s growth slowed to 4.2% in the second quarter of 2025, its weakest pace since the pandemic.

Despite these pressures, Trump insists he is close to securing better terms with Beijing. “We’re pretty close to a deal,” he said on Thursday, hinting at an extension of current trade terms. Washington is pressing China to buy more U.S. soybeans and Boeing aircraft, while also demanding a crackdown on fentanyl-related chemical exports—an issue the U.S. blames for soaring overdose deaths.

TikTok as leverage

Analysts say Beijing is using TikTok as a bargaining chip while holding back exports of rare-earth materials vital for U.S. technology production. “China’s effective use of sticks (rare earths) and carrots (TikTok) has turned things heavily in their favour,” said Scott Kennedy of the Center for Strategic and International Studies.

Washington, in turn, has restricted China’s access to advanced semiconductor designs, jet engines and specialised chemicals.

Political stakes

For Trump, TikTok represents more than a trade issue. It is also a political tool. Banning the platform risks alienating young voters who use it daily. Allowing it to continue under a restructured deal, however, lets him claim a win on national security without losing a vital channel of communication.

Diplomats are already eyeing a possible face-to-face meeting between Trump and Xi at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea next month. Such a meeting could test whether personal diplomacy can ease one of the most fractious U.S.–China relationships in decades.

Liu Pengyu, spokesperson for the Chinese embassy in Washington, said: “Heads-of-state diplomacy plays an irreplaceable role in providing strategic guidance for China-U.S. relations.”

As a sign of goodwill, Beijing recently allowed Wells Fargo banker Chenyue Mao to leave China after months of travel restrictions. Yet even with gestures like this, the unresolved issues—Taiwan, the South China Sea, and competing economic interests—make it obvious that a single phone call will not erase the deep mistrust between Washington and Beijing.

Talks resumed in Madrid on Monday, being the fourth round of discussions in as many months between delegations led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. 

The discussions cover far more than TikTok, as tariffs, rare earth exports, and economic ties are all on the table.

Bessent, speaking alongside U.S. Trade Representative Jamieson Greer, stressed that Washington would not compromise on security. “We are not willing to sacrifice national security for a social media app,” he said, adding that Beijing had come forward with “a very aggressive ask.”

While both sides say technical progress has been made, the sticking points go deeper. For Washington, the divestment of TikTok’s U.S. arm remains a red line. For Beijing, TikTok is part of a negotiation package that includes tariffs and long-standing export restrictions. 

Greer stated that, “From the Chinese perspective, they view as part and parcel of the potential TikTok deal a variety of matters, whether it’s tariffs or other measures that have been taken over years.”

The September 17 deadline for ByteDance to sell TikTok’s U.S. operations is fast approaching. It is already the fourth extension granted by President Donald Trump this year. 

Trump himself has spoken about flexibility, saying: “We may let it die, or we may… I don’t know. It depends on China.” Analysts note the political undertone: TikTok’s popularity with younger voters has given the White House leverage that goes beyond trade.

But the divestment itself is not straightforward. China classifies TikTok’s algorithm as a sensitive export, complicating any potential sale to U.S. buyers. Earlier this year, Beijing blocked a proposed restructuring of TikTok’s U.S. operations after Trump imposed steep tariffs.

The negotiations are also taking place against the backdrop of a fragile truce in the wider trade war. In July, China agreed to resume rare earth exports to the United States, crucial for defence and technology sectors. Yet Beijing has withheld its quota data for 2025, pointing to rare earths that may once again be used as a bargaining chip.

For now, tariffs remain partially reduced, U.S. duties stand at 30% on Chinese goods and China has imposed 10% on American exports. These reductions expire in November, after which Washington plans to maintain tariffs of up to 55% on Chinese imports unless a new deal is reached.

Despite the high stakes, expectations for a breakthrough in Madrid are low. William Reinsch, senior trade adviser at the Center for Strategic and International Studies, told reporters: “I’m not expecting anything substantive between the United States and China unless and until there is a one-on-one meeting between Trump and Xi. Setting that up is really what these talks are all about.”

Such a meeting may take place in October during the APEC summit in South Korea, but Beijing is unlikely to agree without significant concessions, particularly on export controls and tariff rollbacks.

For now, both sides appear willing to extend deadlines rather than risk collapse. A concluding press briefing in Madrid was tentatively scheduled, but whether it will announce progress or simply another pause in a long-running case is still unknown.