Brands Caught Between US-China Trade Tensions

US-China trade tensions have moved beyond tariffs to direct brand-level interventions. Three mechanisms now shape which Chinese brands can operate in the United States: forced divestitures (TikTok), technology restrictions (Huawei, Connected Vehicle Rule), and tariff and exemption elimination (Shein, de minimis). Brands with Chinese ownership face a choice: restructure, retreat, or be barred.

The decoupling era is reshaping brand ownership in real time. The TikTok deal created a template for how Chinese tech companies can operate in the US. The Polestar ban showed how ownership structure, not manufacturing location, determines market access. The Shein losses demonstrated how tariff policy can devastate a business model.

TikTok: The Forced Restructuring Template

In 2024, Congress passed a law requiring ByteDance to sell TikTok's US operations or face a ban. The Supreme Court upheld the law in January 2025. The app went offline for 12 to 14 hours before President Trump signed an executive order delaying enforcement on his first day in office.

After months of negotiation, a deal was finalized in January 2026. TikTok USDS Joint Venture LLC was established as a majority American-owned entity:

• Oracle, Silver Lake, and MGX: 15% each (45% total, managing investors)
• ByteDance: 19.9%
• Other investors (Michael Dell's family office, Susquehanna affiliate, Alpha Wave Partners, Revolution, General Atlantic affiliate, Dragoneer affiliate, Yuri Milner foundation, Xavier Niel's NJJ Capital): approximately 35%

Governance: 7-member board of directors, majority American. Board members include TikTok CEO Shou Chew, TPG's Timothy Dattels, Susquehanna's Mark Dooley, Silver Lake co-CEO Egon Durban, DXC Technology CEO Raul Fernandez, Oracle EVP Kenneth Glueck, and MGX's David Scott.

Algorithm: The content recommendation algorithm is licensed (not sold) from ByteDance to the US entity. It is retrained, tested, and updated on US user data. It is secured in Oracle's US cloud environment.

Valuation: The Trump administration valued the algorithm licence at $14 billion.

The TikTok deal created a template for other Chinese tech companies: license your technology to a US-controlled entity rather than sell it outright. The brand continues operating, but ownership and control shift to American hands. Whether this template applies to other Chinese brands remains to be seen.

Huawei: The Total Lockout

Huawei has been effectively barred from Western markets. US sanctions cut off the company's access to 5G infrastructure, semiconductors, and Google Mobile Services. Huawei pivoted to the domestic Chinese market and non-Western countries.

The contrast with TikTok is instructive. Huawei was excluded entirely from Western markets. TikTok was allowed to continue operating under restrictive terms. These represent two models for dealing with Chinese tech: exclusion versus conditional permission.

Huawei's smartphone business collapsed outside China after losing access to Google Mobile Services. Inside China, Huawei has rebuilt using its own HarmonyOS operating system and domestic semiconductor supply chains. But the brand is effectively invisible in the US and most Western markets.

Polestar: Barred by Ownership, Not Geography

In June 2026, Polestar announced it is pulling new vehicles from the US market starting with model year 2027. The US Commerce Department's Bureau of Industry and Security denied Polestar authorization under the Connected Vehicle Rule.

The Connected Vehicle Rule, finalized in January 2025, bans connected vehicles with a "sufficient nexus" to China or Russia. Software prohibitions are effective model year 2027, and hardware restrictions follow in 2030. The rule covers telematics, cameras, microphones, GPS, Bluetooth, cellular, and automated driving systems.

Polestar's problem is ownership, not manufacturing. The Polestar 3 is built in South Carolina at the Volvo plant near Charleston. The Polestar 4 destined for the US is built in South Korea. Neither vehicle is made in China. But Polestar's parent company is Zhejiang Geely Holding Group, a Chinese company.

The critical contrast: Volvo, which is also owned by Geely, was granted authorization to import model year 2027 vehicles. Volvo operates as a separately listed, more established automaker with a larger US footprint. Polestar shares platforms and software with Geely brands more tightly, creating a closer entanglement that the Commerce Department found disqualifying.

Polestar will continue selling existing inventory of Polestar 3 and Polestar 4 vehicles and servicing existing customers. But the Polestar 5 sedan, Polestar 6 roadster, and all future models will not reach the US market.

Polestar's Q1 2026 results showed 13,126 deliveries (up 7% year-over-year), but gross margin swung to negative 3.2%. The US ban compounds the company's financial challenges.

For more on automotive brand ownership, see our complete guide to automotive brand ownership.

Shein: The De Minimis Casualty

Shein, founded in Nanjing and headquartered in Singapore, built its business model on the de minimis exemption, which allowed duty-free shipping for low-value packages under $800. The exemption was suspended in August 2025.

• $99 million loss (compared to $395 million profit in Q1 2025)
• US revenue fell 14.3% to $2.04 billion
• US share of total revenue dropped from 28%+ to 22.5%
• $328 million one-time accounting charge tied to share valuation ahead of Hong Kong IPO

Chinese-origin products sold by Shein and shipped to the US are now subject to tax rates from 10% to 87.5%. Shein said it is "pursuing a wide range of options, including increasing our prices in the U.S. market to offset a portion of the increased costs."

Shein is preparing for a Hong Kong IPO, but the tariff impact undermines its valuation. China's commerce ministry called the de minimis suspension a "low hanging fruit" trade concession.

For more on tariffs and their impact, see our complete guide to how tariffs affect brand ownership.

The Connected Vehicle Rule: A New Precedent

The Connected Vehicle Rule establishes a new precedent for brand-level interventions. It bans connected vehicles with Chinese or Russian nexus from the US market based on national security concerns. The rule covers not just the vehicle itself but the software and hardware components inside it.

The Polestar-yes/Volvo-no split shows how much discretion sits inside the rule. Corporate structure and software sourcing, not assembly address, determine who gets access. The Polestar 3 is built in South Carolina, but that did not matter. What mattered was Polestar's ownership by Geely and its software entanglement with Geely brands.

The signal to every automaker with Chinese capital or a Chinese tech stack is clear: your ownership structure is a regulatory liability. Companies like Apple (which sources components from China but is US-owned) face no such risk. Companies like Geely, BYD, and SAIC face a structural barrier to the US market.

Other Brands in the Crossfire

Temu: Like Shein, Temu relied on the de minimis exemption for its low-cost shipping model. The suspension has hit Temu's US operations, though the company has diversified its supply chain faster than Shein.

DJI: The world's largest drone manufacturer faces restrictions in the US market. Several federal agencies have banned DJI drones, and legislation has been introduced to add DJI to the FCC's covered list, effectively barring its products from US communications networks.

Xiaomi: The Chinese electronics company faced a military designation controversy when the Trump administration listed it as a "communist Chinese military company." Xiaomi successfully sued to have the designation removed, but the episode demonstrated the risks facing Chinese brands in the US.

SMIC: China's largest semiconductor foundry faces US sanctions that restrict its access to advanced manufacturing equipment.

CATL: The world's largest battery manufacturer faces scrutiny over its connections to the Chinese government and its role in the global EV supply chain.

India's TikTok ban: India banned TikTok and approximately 200 Chinese apps in 2020. None of the homegrown replacements matched TikTok's success, demonstrating that restricting Chinese brands does not automatically create viable domestic alternatives.

What This Means for Consumers

Brand availability is now shaped by geopolitical alignment, not just market demand. Chinese brands face three models of US intervention:

1. Restructuring (TikTok model): The brand continues operating but under US ownership and control. Consumers see the same product, but the corporate structure behind it changes fundamentally. 2. Exclusion (Huawei model): The brand is barred entirely. Consumers lose access to the product and must find alternatives. 3. Retreat (Polestar/Shein model): The brand withdraws or is forced out by regulatory or tariff pressure. Consumers lose access gradually.

Consumer choice narrows as Chinese alternatives are restricted. Prices may rise as low-cost Chinese alternatives are barred. The TikTok template of "license, don't sell" may become the standard for Chinese tech companies globally.

For more on US-China tensions, see our analysis of how tariffs and trade wars affect brand ownership and how government policy shapes brand ownership.

FAQ

Did ByteDance sell TikTok?

ByteDance did not fully sell TikTok's US operations. Instead, TikTok USDS Joint Venture LLC was established as a majority American-owned entity. Oracle, Silver Lake, and MGX each hold 15% (45% total as managing investors). ByteDance retains 19.9%. The algorithm is licensed, not sold, to the US entity and is hosted in Oracle's cloud. The deal was finalized in January 2026.

Why was Polestar barred from the US?

The US Commerce Department denied Polestar authorization under the Connected Vehicle Rule, which bans connected vehicles with a "sufficient nexus" to China or Russia. Polestar's problem is ownership, not manufacturing. The Polestar 3 is built in South Carolina and the Polestar 4 in South Korea, but Polestar's parent company is China's Geely. Volvo, which is also owned by Geely, was granted authorization because it operates as a more separate entity with a larger US footprint.

What is the Connected Vehicle Rule?

The Connected Vehicle Rule, finalized in January 2025, bans connected vehicles with Chinese or Russian nexus from the US market. Software prohibitions are effective model year 2027, and hardware restrictions follow in 2030. The rule covers telematics, cameras, microphones, GPS, Bluetooth, cellular, and automated driving systems. The rule determines eligibility based on corporate structure and software sourcing, not assembly location.

How do trade tensions affect Chinese brands?

Chinese brands in the US face three models of intervention: forced restructuring (TikTok, where the brand continues under US ownership), total exclusion (Huawei, where the brand is barred entirely), and retreat (Polestar and Shein, where regulatory or tariff pressure forces the brand out). The specific model depends on the brand's sector, ownership structure, and the strategic importance of the technology involved.

Conclusion

US-China trade tensions have moved beyond tariffs to direct brand-level interventions. TikTok was forced to restructure. Huawei was locked out. Polestar was barred by ownership. Shein was devastated by the de minimis suspension. The Connected Vehicle Rule established a new precedent for barring brands based on their corporate structure, not their manufacturing location.

The "license, don't sell" TikTok template may become the standard for Chinese tech companies seeking to operate in the US. But the Polestar ban shows that even restructuring may not be enough when the ownership nexus to China is deemed too close. For consumers, the result is a narrowing of brand choices and potentially higher prices as low-cost Chinese alternatives are restricted.

Want to learn more? Read about how tariffs and trade wars affect brand ownership, explore how government policy shapes brand ownership, or browse our complete guide to automotive brand ownership.

Sources

1. TikTok Newsroom. "Announcement from the new TikTok USDS Joint Venture LLC." 2026. newsroom.tiktok.com 2. AP News. "TikTok's new US deal: Will it change your feed and address security concerns?" 2026. apnews.com 3. Axios. "TikTok deal finalized before Trump app ban kicks in." January 2026. axios.com 4. CNBC. "TikTok forms U.S. joint venture, names Adam Presser CEO." January 2026. cnbc.com 5. Bloomberg. "Polestar Barred From Future US Sales Under Chinese Tech Rules." June 26, 2026. bloomberg.com 6. Ars Technica. "Feds deny Polestar authorization to sell cars in US from model year 2027." June 2026. arstechnica.com 7. CNN. "Polestar says the Commerce Department is banning US sales of its cars." June 2026. cnn.com 8. American Bazaar. "Shein reports $99 million Q1 loss after de minimis rule ends." July 2026. americanbazaaronline.com

All brand ownership data verified through WhoBrands.com's proprietary research methodology. Last updated: May 26, 2026.