TikTok - which has been downloaded 175 million times in the U.S. and more than a billion times around the world - argued in the suit that Trump's order was a misuse of the International Emergency Economic Powers Act because the platform is not "an unusual and extraordinary threat".
But China's commerce ministry published new rules on Friday that added "civilian use" to a list of technologies that are restricted for export.
The company's regulatory team and deal negotiators are in discussions to see if it's still possible to craft a sale that can win approval from both governments, an acquirer, venture investors and ByteDance itself, said one of the people on condition of anonymity.
According to Chinese government trade advisor Cui Fan speaking to the country's official Xinhua News Agency on Saturday, as reported by the Wall Street Journal, TikTok owner ByteDance needs to examine the new export list and "seriously and cautiously" consider if a license is required for technologies being sold, and whether to halt " negotiations entirely.
We'll keep you posted on all the TikTok news, stay tuned to OnMSFT for the latest.
However, parent company ByteDance has been left facing an uncertain future after it appeared that the new laws could block it from giving potential buyers access to its video recommendation algorithm. TikTok claims about 100 million monthly active users in the US. The Chinese government's move is being seen as a direct response to what experts and industry analysts had referred to as an act akin to bullying, by USA president Donald Trump.
Cui Fan, an worldwide trade professor at the University of global Business and Economics, said the changes to the export list would most likely apply to TikTok, according to the Times.
Kendra Schaefer, head of digital research at consultancy Trivium in Beijing, thinks the Chinese government is doing something similar to what Washington has been doing - placing restrictions on the other country's leading tech firms.
The poll, which surveyed 1,349 adult respondents across the U.S., found that 40 percent backed Trump's recent executive order forcing ByteDance to sell its TikTok operations by September 15. Here's everything we know about the app's future in the United States - and everything we don't. The remaining 30% said that they did not know either way.