Hollywood's fragile hopes for a post-pandemic revival may have just been crushed—by its government's tariff policy.
Following China's recent announcement to reduce the import of American films as a retaliatory measure against U.S. tariffs, shares of major U.S. film companies, including Warner Bros. Discovery, Walt Disney, and Paramount Global, plummeted further, extending their already persistent declines.
On April 16, U.S. Federal Reserve Chair Jerome Powell warned that former President Donald Trump's tariff policies would "very likely" spur inflation and have long-lasting adverse effects. The comments triggered another wave of sell-offs in the entertainment sector, with analysts expressing deep concern over Hollywood's increasing isolation from the Chinese market.
"Hollywood may be looking at a full-blown crisis," wrote Vanity Fair, adding that summer blockbusters could be the first to feel the sting. The loss of the Chinese market, once a financial lifeline, could devastate American studios.
China: A Market of Heroes and Zeros
American media analyst Paul Dergarabedian coined the phrase "Hero or Zero" to describe the binary outcome for Hollywood films in China. A successful title can rake in hundreds of millions; a flop will vanish into obscurity. His analysis, cited by Axios, stressed China's massive impact on global box office returns.
For instance, Godzilla x Kong: The New Empire grossed $196 million in North America and an impressive $131 million in China—far more than any other international market. Similarly, Alien: Romulus earned $108 million in China, surpassing its North American earnings.
"Without access to China, many big-budget films may never break even," said Monique White, EVP of California Pictures. She warned that losing such a key market would force studios to slash budgets, threatening the quality and scale of future productions.
Soft Power in Decline?
According to a report by media analytics firm Omdia, Hollywood's global market share fell to 51% in 2024, down from over 60% a decade ago. Chief analyst David Hancock argued that Trump-era tariffs and China's retaliation are accelerating the erosion of U.S. cultural influence.
"The ultimate casualty of the tariff war may be America's soft power," Hancock concluded.
Omdia analyst Paul Erickson raised further concerns about how China might extend these restrictions to streaming platforms. He speculated whether Beijing would ban only new U.S. films or remove existing American content from Chinese streaming libraries.
A Rocky Road Ahead for Hollywood
Marvel Studios, which plans to release Thunderbolts in China on April 30, faces an uncertain future. Despite Guardians of the Galaxy Vol. 3 grossing $86 million in China last year, the industry fears that any new restrictions could derail future projects like Avengers 5.
Universal Pictures is banking on this summer's reboot Jurassic World: Rebirth. Disney hopes to replicate the $245 million success of Avatar: The Way of Water in China with Avatar 3: The Seed Bearer set for release in December.
But with unpredictable U.S. trade policies and China's growing assertiveness, Hollywood's golden age in China may be nearing its end.
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