Trump’s long-shot bid for cut of TikTok sale echoes his border wall pledge

  • TikTok
  • Wednesday, 05 Aug 2020

US president Trump’s latest demand is for either the Chinese sellers or the American buyers of TikTok’s US operations to pay the US Treasury a fee based on the sale price, even though it wasn’t clear under what authority he could demand the money. — Reuters

A new border wall paid for by Mexican pesos flowing to the US Treasury. Payments for farmers and ranchers funded by tariffs on Chinese goods collected by the federal government. And now, cash to unlock the sale of the viral video platform TikTok in the United States.

President Donald Trump has frequently depicted himself as standing up for the taxpayer by strong-arming those looking to do business with the United States – whether or not his promises materialise.

His latest demand is for either the Chinese sellers or the American buyers of TikTok’s US operations to pay the US Treasury a fee based on the sale price, even though it wasn’t clear under what authority he could demand the money. Trump said TikTok will have to close in the United States by Sept 15 unless there’s a deal to sell the social network’s domestic operations to Microsoft Corp or another US company.

"It would come from the sale,” the president said Aug 3 of the TikTok payment, "which nobody else would be thinking about but me. But that’s the way I think.”

The president’s tough-guy proclamations often are muddied by the real-world machinations of finance and diplomacy.

Kudlow’s caution

On Aug 4, White House economic adviser Larry Kudlow suggested the TikTok payment may not happen. He told Fox Business Network that he didn’t know if it’s a "key” stipulation and that he’s "not sure it’s a specific concept that will be followed through.” He also said there’s "no specific blueprint” for a payment to the United States.

White House staff are looking at using compliance costs as a way to collect the money, according to a person familiar with the matter. A White House spokesman and the Treasury Department declined to elaborate on the mechanism Trump would use.

Trump never collected the wall payment from Mexico. He eventually claimed trade gains under his revised North American Free Trade Agreement more than covered the billions of dollars of taxpayer expense.

The increased tariffs on Chinese goods sold in the United States were paid by importers, including US companies. That resulted in higher prices for American consumers.

CFIUS role

Any payment to the United States on the sale of TikTok might prove similarly underwhelming, even though Trump said on Aug 3 that he expected "a very large percentage” of the sale price to be paid over to the Treasury.

The United States does assess fees associated with deals under review by the Committee on Foreign Investment in the United States, or CFIUS, which investigates overseas acquisitions of US businesses. But those charges – set on a sliding scale and going no higher than US$300,000 (RM1.26mil)– would appear to fall short of what Trump described.

The United States has been investigating potential national-security risks due to TikTok being owned by China’s ByteDance Ltd.

Potential buyers may be hoping they can get away without writing a check at all. While Microsoft – the leading contender to purchase TikTok from ByteDance – committed in a blog post to "providing proper economic benefits to the United States, including the United States Treasury”, that language referred to ordinary tax revenue and job creation, according to a person familiar with the matter.

Big proportion

On Aug 5 evening, Trump told reporters: "What I’ve said to them is whatever the price is, a very big proportion of that price would have to go to the Treasury of the United States, and they understood that and actually they agreed with me.” Trump didn’t specify whether "they” referred to Microsoft, ByteDance or another entity.

In the end, the president’s demand for payment might prove similar to the 15-second videos that make up the social platform itself: surprising and engaging, but ultimately fleeting. – Bloomberg

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