The trade war is coming for America's movies

Yahoo

11-04-2025

As trade war tensions between the U.S. and China escalate, one of America's most powerful exports is taking a hit — not soybeans or semiconductors, but stories.
The China Film Administration announced Thursday that it would begin reducing the number of American films shown in Chinese theaters, ABC News reports. The move was framed as a direct response to tariff pressures from President Donald Trump, whose administration has raised levies on Chinese imports to 145%, which includes duties that were implemented in February.
Chinese officials warned that the 'abuse [of] tariffs on China' would erode the domestic audience's favorability toward American films. When asked about China's retaliatory restrictions, Trump responded: 'I think I've heard of worse things.'
For the American entertainment industry — long reliant on international markets, especially China — the escalating trade war isn't a minor development. Even if movie studios avoid direct tariffs, rising tensions risk disrupting revenue streams in less obvious but meaningful ways: tighter import quotas, streaming restrictions, reduced merchandising opportunities, and delays or cancellations of international co-productions.
The downstream effects could be even more significant. When fewer people see a film overseas, the financial impact extends well beyond ticket sales. Lower visibility can weaken the broader commercial ecosystem built around popular intellectual property — including apparel, collectibles, licensing agreements, and theme park attractions. In an industry where audience exposure is closely tied to brand value, diminished global access can quietly constrain long-term growth.
The U.S. media and entertainment sector is the largest in the world, valued at $649 billion out of a $2.8 trillion global market, according to PwC. The U.S. sector is projected to grow to $808 billion by 2028. That expansion depends heavily on access to foreign markets — especially China, which, in recent years, has become the world's second-largest film market and a key territory in Hollywood's international strategy.
Major U.S. studios rely on international release windows, localized marketing, and global licensing networks to maximize returns on blockbuster productions. China's size, market growth, and influence have made it especially central to that model. With its regulators now citing tariffs as a rationale for cutting back on U.S. film imports, the risks to entertainment exports — and the industries that depend on them — are mounting.
Take The Meg, the Jason Statham–led giant shark movie that became a global sensation in 2018. At first glance, it's popcorn fare with a big budget and bigger teeth. But beneath the surface, it was a U.S.-China co-production designed to appeal to both markets. Backed by Warner Bros. (WBD) and China's Gravity Pictures, the film wove in Chinese locations, Chinese talent, and cultural cues that resonated with Chinese audiences. The strategy paid off: Of the movie's $530 million global box office haul, over $150 million came from China — more than any market besides the U.S.
The success of The Meg wasn't a fluke. Its 2023 sequel, Meg 2: The Trench, repeated the playbook and opened to a stronger debut in China than in North America. Without that international boost, particularly from Chinese theaters, neither film likely would have cleared profit margins or justified their nine-figure budgets.
Perhaps more importantly, the fact that the franchise exists at all speaks to how Hollywood increasingly develops projects with China in mind — often not just as a buyer, but as a partner.
These kinds of hybrid blockbusters are more than just movies. They're proof of concept for a globalized entertainment economy, one that turns co-productions into cultural exports and box office success into licensing, streaming, and merchandising empires.
When geopolitical tensions chill that flow, the impact reverberates beyond ticket sales — shrinking the canvas for big, border-crossing stories and forcing studios to rethink which projects are worth the gamble.
Few American companies exemplify the global reach of entertainment intellectual property (IP) like Disney (DIS). In 2023, Shanghai Disneyland attendance soared 164% as pandemic restrictions lifted, and in December, the park opened the world's first Zootopia-themed land — built specifically for its Chinese audience. That's not just branding; it's strategic infrastructure investment designed to turn storytelling into international tourism, retail, and recurring revenue.
But the real commercial engine may lie in the merchandise. Disney's Duffy and Friends toyline — which has a relatively quiet presence in the U.S. — has become a cultural phenomenon in Asia, generating hundreds of millions in revenue. Its breakout character, LinaBell, debuted in Shanghai in 2021 and quickly became a merchandising juggernaut. Fans line up for hours to meet her in costume, buy plush toys, and of course, post the pictures online.
This is what IP monetization looks like when it works: characters becoming products, becoming attractions, becoming brand equity.
Disney remains the world's leading global licensor, with tens of billions in brand licensing every year. That includes everything from toys to clothes to lunchboxes — much of it reliant on cross-border partnerships and consumer demand in major overseas markets.
When that flow is disrupted, the economic effects don't show up all at once. But they do show up.
There are trade war implications for investors holding some of the biggest names in U.S. stocks.
Disney, a Dow and S&P 500 heavyweight, is deeply exposed to shifts in foreign sentiment and market access — big enough, in fact, to drag the entire Dow lower when sentiment turns. Global players such as Sony (SONY), Comcast (CMCSA), and Netflix (NFLX) face similar risks, all relying on international licensing, co-productions, and streaming expansion to meet growth targets. Even tech giants such as Apple (AAPL) and Amazon (AMZN) have tied their futures to entertainment, investing heavily in original content and global distribution.
For all these companies, geopolitical flare-ups don't need to trigger tariffs directly to do damage. Sentiment, access, and consumer goodwill are just as critical — and are potentially more fragile.
This week's film quota crackdown could be a flashing yellow light.
Chinese officials aren't just signaling frustration with tariffs — they're telegraphing a broader pushback against American 'pressure and selfish gains.' Cultural retaliation often comes just before or hand in hand with harsher trade restrictions, but in a world where stories are exportable assets, even soft bans can leave a mark. Investors should tune in.
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