They can't, but they can prevent a foreign company from doing business in the US (and from US companies doing business with a foreign company)—which is what they're doing.

Bytedance (TikTok) can "work around this problem" by selling their US business to a US company—which is what they're doing.

It's shady, completely legal, and fully up to the President/executive branch (e.g. Trump) to set policies in this area.