By Patrick Frater –

Mainland Chinese authorities on Thursday announced that the number of Hollywood films imported into the country would be reduced in retaliation for the U.S. tariffs against Chinese goods.

The move is more symbolic and political than damaging or painful, because the popularity of Hollywood films with Chinese audiences has cratered in the years since the previous Donald Trump presidency.

The conflict between China and the U.S. remains the biggest flashpoint in the global trade reset sparked by the use of tariffs to redress what President Trump sees as economic and political imbalances.

And, while Trump on Wednesday unveiled a 90-day pause in the imposition of tariffs against dozens of other countries, he increased the tax on Chinese imports to an astonishing 125%.

China’s retaliatory swipe at Hollywood imports had been anticipated earlier this week (but before the latest tariff increase) by well-positioned Chinese bloggers.

Today (10 April), the China Film Administration made it official.

“The wrong move by the U.S. government to abuse tariffs on China will inevitably further reduce the domestic audience's favorability towards American films,” a spokesman said.

“We will follow the market rules, respect the audience’s choice, and moderately reduce the number of American films imported,” the spokesman added.

Under the prevailing bilateral U.S.-China Film Agreement, China imports 34 U.S. movies per year on revenue sharing terms. These must pass through a state-controlled importer and, officially at least, be distributed by one of two state-owned distribution companies.

Their box-office revenue (minus deductions by online ticket sellers) is shared with the Hollywood studio at the rate of 25% of gross revenues. The Chinese distributor is supposed to pay the costs of marketing (known as print and advertising) though in reality the Hollywood studios also co-finance promotion efforts.

The 2012 Film Agreement came up for renewal in 2017, with the U.S. Trade Representative, on behalf of the Hollywood studios, seeking access for more films, a higher revenue share and the possibility of setting up their own releasing companies in China. The talks broke down without agreement before the COVID pandemic, meaning that the current rules remain in force. Until today.

Hollywood films have lost out hugely in China since 2019. Market share of all imported titles hitting a 15% low in 2023.

Commentators attribute that decline to multiple factors including: Chinese filmmakers improving the scale and quality of their own movies; changing audience demographics and tastes as cinema building has expanded into tier 3 and 4 cities; and Chinese audiences’ superhero and franchise fatigue

A recent example of that: Disney’s “Snow White” failed to gross even US$1 million on its 21-23 March opening weekend in China. The Marvel franchise movie also failed to connect. In February, “Captain America: Brave New World” opened with only US$10.6 million in China. That compares with the 2019 release of “Avengers: Endgame”, which earned US$582 million/RMB4.25 billion and remained on screens for several weeks.

Chinese audiences’ embrace of locally produced films recently boosted the Chinese New Year season to record levels and “Ne Zha 2” to a US$2.1 billion theatrical haul. That is the highest total for any animation film, beating anything produced by Disney or Pixar.