Snap Inc. (SNAP) saw its stock price plummet by 5.05% in Tuesday's trading session, as investors reacted to news of potential disruptions in the social media landscape and broader concerns about U.S. trade policies. The sharp decline comes as reports suggest that a deal to spin off TikTok's U.S. assets has been put on hold, following President Donald Trump's recent tariff announcements.

According to sources familiar with the matter, China has indicated it would not approve the TikTok deal after President Trump's latest tariff threats. This development has sent shockwaves through the social media sector, potentially benefiting established players like Snap in the short term by reducing competition. However, the market appears to be pricing in the broader implications of escalating trade tensions and their potential impact on tech companies with global operations.

The uncertainty surrounding TikTok's future in the U.S. market could have both positive and negative implications for Snap. While a potential ban or forced sale of TikTok might reduce competition for user attention, it also highlights the volatile regulatory environment facing social media companies. Investors may be concerned about the possibility of similar actions against other platforms in the future, contributing to the downward pressure on Snap's stock price.