I can't speak for the motives of the administration, but the idea that TikTok is a national security risk is plausible.
From location data alone, one can infer your political interests (do you go to the gun range? Are you attending BLM protests?), your religious affiliation (do you go to houses of worship?), and your hobbies/interests, and that alone (far from a complete list) is a massive opportunity for a range of abuses - including targeted election interference, through legal channels, where a foreign actor (e.g. China) is able to show personalized ads (or other forms of targeted propaganda) directly to the people most vulnerable to being swayed in any direction.
This is particularly dangerous if the organization is based in China, as it may be subject much more directly to the whims of the CCP (fewer protections against government interference/overreach, like requesting direct access to real time data).
So while I am also opposed to US tech giants (and smaller companies as well) siphoning up this data, I am more opposed to a Chinese app siphoning up US data when the CCP has already demonstrated a propensity for meddling in US politics (with i.e. bot/troll farms).
With basic data analysis techniques (even without modern Machine Learning), this data invaluable to anyone interested in testing/swaying public opinion. Furthermore it is never truly anonymous and even if it were, in aggregate it still represents an enormous accumulation of soft power.