Experts say banning TikTok will impact multiple economies

There are over 1.925 billion users on the social media app of TikTok. Initially called Musical.ly, TikTok was bought by Chinese company ByteDance in 2018 and began its global expansion. The previous ban on TikTok in the United States has sparked concerns about its global impact on business, job markets, and digital innovation.

TikTok plays a critical role in the U.S. economy, particularly for small and medium-sized businesses that leverage the platform for marketing, sales, and brand engagement. According to a panel of U.S. economic experts, a TikTok ban could have far-reaching consequences.

First, there is expected to be a loss of business opportunities; many small businesses rely on TikTok’s targeted advertising and organic reach to connect with younger demographics. The absence of TikTok could force businesses to pivot to more expensive marketing platforms like Instagram and YouTube, potentially reducing their visibility and revenue streams. Along with this, the Chicago Booth Review estimates that U.S. businesses heavily integrated with TikTok could experience layoffs and downsizing due to decreased engagement and sales. Some economists argue that banning TikTok might discourage foreign investment and fuel further tensions between the U.S. and China, impacting broader trade relations. 

Countries across Europe, where TikTok has established a strong footing, are also closely watching the U.S. situation. The potential ripple effects of a ban could influence economic growth and employment across the region. 

TikTok’s socio-economic impact in Germany, France, Italy, the Netherlands, and Belgium reveal that the platform contributes significantly to their economies. In 2023, small to medium businesses using TikTok generated approximately 3.5 billion euros in revenue in these five markets. TikTok supported over 51,100 jobs, with Germany alone accounting for 18,600 jobs. Along with this, the platform’s low barriers to entry have allowed small businesses, particularly those owned by small creators, to thrive. If, at any point, this TikTok ban were to happen in Europe, the economic impacts would be severe. 

Europe would not be the only region facing challenges due to a ban; it could also increase tension between the world’s two largest economies: the United States and China. China views TikTok as a strategic digital asset, and its government has already taken steps to prevent a forced sale of the app without its strong algorithm. 

A United States ban could hinder ByteDances’s global expansion plans and reinforce China’s focus on developing its domestic tech industry to counter Western restrictions. Without TikTok’s presence in the U.S., China may double down on expanding its digital footprint in emerging markets such as Southeast Asia and Africa, further dividing the global technology landscape. Although China has historically banned U.S. social media platforms, the loss of TikTok in the U.S. could trigger retaliatory measures targeting American firms operating in China, potentially disrupting global supply chains. 

The potential ban of TikTok carries significant economic implications across many regions. While U.S. businesses may struggle with higher marketing costs and job losses, European economies could face small business growth and employment setbacks. Meanwhile, China could leverage the situation to advance its digital strategy in other parts of the world. Ultimately, a TikTok ban would not only reshape social media consumption but also redefine global economic and technological relationships.