A federal appeals court upheld a law requiring China-based internet company ByteDance to divest TikTok’s U.S. operations by Jan. 19 or face a nationwide ban.

Both Republican and Democratic lawmakers say TikTok poses a threat to national security because of its ties to China, as the country could allegedly use the app to spy on Americans and collect personal data.

The unanimous ruling by a three-judge panel of the U.S. Court of Appeals in Washington on Friday rejected TikTok’s argument that the law is unconstitutional and violates the First Amendment rights of the 170 million Americans who use the popular social media app.

TikTok said it would ask the U.S. Supreme Court to overturn the appeals court’s decision.

In a statement posted on its website on Friday, TikTok said: “Unfortunately, the TikTok ban was designed and enforced based on inaccurate, erroneous and hypothetical information, resulting in total censorship of the American people.” The TikTok ban will, if “If it is not stopped, it will silence the voices of over 170 million Americans here in the United States and around the world on January 19, 2025.”

TikTok’s looming ban comes as the app tripled its US shopping sales to over $100 million on Black Friday, the company said.

TikTok Shop, the app’s e-commerce feature, launched in 2023. According to current data, the company has 15 million e-commerce retailers worldwide, including around 500,000 in the USA.

The company said the number of shoppers using TikTok Shop during its Black Friday and Cyber ​​Monday holiday shopping campaign increased by 165% compared to last year.

“One-third of all purchases made on TikTok Shop during the campaign went to small and medium-sized businesses,” TikTok said in a press release. “The most popular categories during the campaign included makeup, skin care, fragrances, bath and body care, personal care items, men’s clothing, interior furniture, kitchen appliances, fitness items and sports equipment.”

A ban on TikTok in the US would be “devastating” for e-commerce retailers and the logistics industry, said Maggie Barnett, CEO of LVK.

LVK is the fulfillment division of parent company and warehouse management system ShipHero, a New York-based e-commerce software and fulfillment provider.

“It will be devastating for these sellers not to have that channel,” Barnett said in an interview with FreightWaves. “At LVK, we have seven warehouses with an area of ​​one million square meters. I represent about 500 sellers. I’ve seen a handful of these sellers increase their sales by 30% after switching to Tik Tok because the incentives were great. ShipHero has native integration with TikTok. We invested money into building this native integration directly from TikTok Shop to ShipHero because we saw that people wanted it. Our integration works. We see sellers’ sales increase by 30% once they use this connection.”

Barnett said sellers using TikTok now face the possibility of reduced e-commerce reach or having to switch to alternative platforms to survive.

LVK’s third-party logistics network runs on ShipHero’s WMS (warehouse management software) platform, with 50% of customers being 3PLs and the other 50% being brands.

“What we see is that there are some 3PLs that only work with TikTok influencers and only provide 3PL services for that TikTok channel. Many of our brands use our WMS software, over 50% of their sales are all through TikTok,” Barnett said. “TikTok’s ability to convert shoppers surpasses any other type of social commerce we’ve ever seen.”

Another blow to TikTok retailers and the e-commerce market could be changes to Section 321 of the Trade Facilitation and Trade Enforcement Act, Barnett said.

The change could remove a de minimis exemption for imports into the U.S. valued at less than $800. The exemption allows goods to be imported without the imposition of customs duties and with less customs inspection.

“Because of Section 321, it’s going to hit these smaller e-commerce brands,” Barnett said. “If sellers bought things from China, those prices would also rise. Now they have no distribution channel and their cost of goods goes up.”

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