On January 10, 2025, the U.S. Supreme Court will hear an appeal from a December 6 D.C. Circuit Federal Court of Appeals decision upholding a 2024 federal law requiring Chinese company ByteDance to divest itself of the TikTok platform. The law will take effect on January 19, unless the Supreme Court strikes it down. Even assuming the law is upheld, it is possible that the new Trump Administration may nevertheless consider whether to allow TikTok to continue to operate in the U.S. as a ByteDance corporate subsidiary.
The future status of TikTok merely foreshadows a large number of important business-related U.S.-China conflicts that will substantially affect economic growth and innovation.
Background on TikTok
TikTok is a social-media platform that lets users create, upload, and watch short video clips overlaid with text, voiceovers, and music. For each individual viewer, the platform creates a continuous sequence of videos based upon that user’s behavior and several other factors, with the aim of keeping that user engaged. The TikTok platform has approximately 170 million monthly users in the United States and more than one billion users worldwide.
ByteDance, TikTok’s corporate parent, is headquartered in China. It has significant operations there and is subject to Chinese Government control.
Citing national security concerns, President Trump issued an executive order ordering ByteDance to divest “assets or property,” that enabled TikTok’s operations in the U.S. Two lower federal courts struck down the order as beyond the President’s authority under the International Emergency Economic Powers Act.
President Biden issued a new executive order in 2021 identifying China as a foreign adversary, and signed into law a bill prohibiting the use of TikTok on government devices in 2022.
TikTok made proposals to the federal government to ensure TikTok’s operational independence from ByteDance. The Executive Branch rejected them, finding that certain data of U.S. users would still flow to China and ByteDance would still be able to exert control over TikTok’s operations in the United States. In the Executive’s view, divestment was the only solution that would adequately address serious national security concerns.
In 2024, Congress passed a law prohibiting the distribution or maintenance in the U.S. of “foreign adversary-controlled applications,” including TikTok. (“Foreign adversaries” are defined as China, Russia, Iran, and North Korea.) This requires ByteDance to sell TikTok to a U.S. company within 270 days of the law’s enactment, that is, by January 19, 2025. The President may, however, grant a 90-day extension based upon progress towards a qualified divestiture.
ByteDance, TikTok, and certain TikTok users challenged the law as unconstitutional in various respects. They argued that the law interfered with TikTok’s First Amendment free speech rights; violated the guarantee of equal protection of the laws; constituted a prohibited “bill of attainder” (a law that imposes punishment without a trial); and amounted to an unconstitutional taking of ByteDance’s property.
The Court’s Opinion
The D.C. Circuit Court of Appeals (designated by the statute to hear challenges) firmly rejected all these arguments in a lengthy opinion. The three judges on the panel – Douglas Ginsburg (a Reagan appointee who authored the opinion), Neomi Rao (a Trump appointee), and Sri Srinivasan (an Obama appointee) – are among the most respected jurists in the United States. Thus, the Supreme Court likely will accord significant respect to their decision.
The First Amendment analysis was the opinion’s centerpiece. It employed “strict scrutiny” review in assessing whether the statute passed muster. This standard is the least favorable to the government. It applies to restrictions that regulate speech based on its subject matter, topic, or viewpoint.
Under strict scrutiny review, a law’s restraint on speech violates the First Amendment unless the government can “prove that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest.”
The opinion stressed that rather than attempting to influence the content that appears on a substantial medium of communication, the law acted solely to prevent a foreign adversary from doing so. It emulated other federal statutes in placing restrictions on corporate ownership or control where it could have national security implications.
Specifically, in this situation, compelling national security concerns were raised by the Chinese Government’s ability, through ByteDance, to manipulate information and to obtain huge volumes of sensitive data from U.S. sources. Citing a Supreme Court decision, the opinion emphasized that “it is not the job of the petitioners or the courts to substitute their judgments for those of the political branches on questions of national security.”
The law’s divestment requirement was also narrowly tailored to satisfy the government’s national security interests, as the opinion explained:
“Here the relevant provisions of the Act apply narrowly because they are limited to foreign adversary control of a substantial medium of communication and include a divestiture exemption. By structuring the Act in this way, the Congress addressed precisely the harms it seeks to counter and only those harms. Moreover, as already explained, the Act’s emphasis on ownership and control follows a longstanding approach to counter foreign government control of communication media.”
Judge Srinivasan concurred with the majority opinion. He noted, however, that strict scrutiny was not even needed, since the statute centrally addresses acts by a foreign adversary rather than a domestic speaker, and does not target any specific viewpoint or content. He opined that the law need only survive “intermediate scrutiny,” which is met if “the divestment mandate is not substantially broader than necessary” to meet the government’s goals. “The Act meets that standard[,]” according to the Judge.
It appears likely (though not 100 percent certain) that the Supreme Court will affirm the decision, given its detailed and careful analysis, which is strongly anchored in prior Supreme Court precedents. The Court may be expected to act very quickly, in light of the January 19 deadline.
What Comes Next
On December 16 TikTok requested that the Supreme Court temporarily pause the law, claiming even a temporary shutdown would impose major harm on TikTok and its users.
Also on December 16, President-Elect Trump is reported to have met with Tik-Tok’s CEO to discuss whether TikTok should be allowed to continue to operate in the U.S.
In short, TikTok’s American saga may not yet be over, even if it loses before the Supreme Court. Whether the Trump Administration would support allowing TikTok to continue operating for a short while as it seeks a buyer – or even take legal action to allow TikTok to continue to operate indefinitely (through a new executive order or law) – remains to be seen.
Chinese Challenges Beyond TikTok
Whatever happens to TikTok, there are many more major challenges in U.S.-China economic relations coming down the pike. Some of these are highlighted in a December 2024 Congressional Research Service report:
“China’s system integrates state and corporate interests, enabling the government to use trade tools—antidumping, antitrust, technical standards, and procurement—economic coercion, and PRC intellectual property (IP) theft activity to advantage its firms and economic development goals. PRC government policies in many cases have required firms to transfer technology and capabilities in order to operate in strategic sectors. U.S. firms have faced a lack of reciprocity, trade barriers in some key areas, a growing PRC state role in commercial activity, expanding industrial policies, and rules governing economic security and data. . . .
The executive branch and Congress have acted to address PRC practices that challenge U.S. economic leadership, distort markets, and hinder fair competition. Congress continues to deliberate on approaches and the use of U.S. authorities.”
One possible new U.S. strategy might be to impose targeted tariffs to offset market distortions created by the Chinese Government that favor its producers. Such an approach is described in a November 2028 “Growth Presidency” report by the Growth Commission, a non-partisan group of international economists analyzing public policy and regulatory proposals.
In sum, handling TikTok may prove to be a relatively minor entry on the daunting U.S.-China economic security agenda awaiting the new Trump Administration.