It basically boils down to the USA not wanting China to be the ones collecting all that data. Which is a bit tenuous. The owner of TikTok is ByteDance, ByteDance is registered in the Caymans, with global headquarters in LA and Singapore. The current CEO is a Chinese national, but lives in Singapore. TikTok does collect quite a lot of data, but the FB app collects at least as much. It's a bit of Sinophobia.
My personal pet theory is the US alphabet boys have a deal with all the other social media giants for first pick of data they mine, and TikTok didn't want to play ball.
This is just what I've kinda thought, it's by no means absolute fact, and I look forward to hearing what other people think/know about it.