Movies

Trump tariffs are another nail in the coffin for Hollywood in China

BBG News

Increased trade conflicts under President Trump’s administration may lead to a sudden halt in Hollywood‘s plans for success in China.

Following Trump’s announcement this week about potential tariff hikes towards one of the world’s most populous nations, China’s Ministry of Commerce has vowed to stand firm and persevere. Two prominent Chinese bloggers hinted at possible measures Beijing might take in response, such as a ban on Hollywood films, based on reports from Bloomberg News.

Making such a move places the leading entertainment companies directly in the midst of the trade conflict. The possibility of being cut off from China’s vast movie market is particularly challenging for American studios, as they strive to recover financially from issues like merger debts, the economic impact of COVID-19, ongoing labor disputes in Hollywood, and heavy investments in producing movies and TV shows for their streaming services to rival Netflix.

In China, domestic movies were being given more emphasis over foreign ones, making it challenging for studios to maintain momentum with their films in the region.

Stanford Rosen, a political science professor at USC with expertise in U.S.-China relations, stated, “They’re striving to surpass Hollywood,” and he emphasized that this endeavor has taken on a nationalistic significance for China, beyond just being an economic matter.

Over the past few years, American movie studios have faced growing competition from a wave of popular Chinese films featuring culturally resonant themes. The Chinese film industry has excelled at producing high-quality movies backed by the Chinese Communist Party, which has limited the success of English-language blockbusters that once thrived in the market.

Hollywood Inc.

American entertainment firms focused on immediate earnings, whereas China carefully executed a long-term strategy with its propaganda machinery. Which approach proved more successful? Hint: The answer is not hard to guess.

A highlight emerged last week as the “A Minecraft Movie,” produced by Warner Bros. and Legendary Pictures, became number one at the Chinese box office. This movie, derived from the popular video game featuring Jason Momoa and Jack Black, earned a revenue of $15 million in China. In doing so, it dethroned “Ne Zha 2,” a local animated film that has amassed over $2 billion in earnings.

“A Minecraft Movie” is just a wisp of past glories.

Twenty years back, Hollywood studios considered China, often referred to as “the Middle Kingdom”, as a massive territory to capitalize on. Filmmakers adjusted their narratives and incorporated prominent Chinese motifs and settings to gain the favor of Chinese censors and audiences. A striking instance of this occurred in 2011 when MGM modified a remake of “Red Dawn” by erasing any signs of Chinese antagonists. Instead, the movie’s adversaries were portrayed as originating from North Korea, where there was no film market.

Hollywood reaped handsome rewards — for a while.

Walt Disney Co.’s hit 2019 Marvel film “Avengers: Endgame” made more than $600 million in China.

In that very year, Paramount Pictures unveiled an initial preview for “Top Gun: Maverick,” featuring a slight modification in Tom Cruise’s attire as the iconic fighter pilot. In the 1986 movie, Capt. Pete “Maverick” Mitchell flaunted a bomber jacket adorned with Japanese and Taiwanese flags. However, these insignia were considered politically controversial by China, leading to their removal in this new presentation.

2019’s trailer for Top Gun featured unclear symbols on Maverick’s jacket. However, despite the film’s portrayal of American military power, China declined to approve its screening.

As a film critic, I must disclose that when “Top Gun: Maverick” graced our screens in 2022, it was revealed that Tencent Holdings, an investor in the co-producer Skydance Media, had decided to step away from the project earlier on. Interestingly enough, the film’s Japanese and Taiwanese flags were prominently displayed once more upon release, which added a unique cultural touch to this modern aviation epic.

World & Nation

It’s stated that, as the global leader in box office sales, China is leveraging its market dominance to shape Hollywood productions and amplify the messages of the Communist Party.

Movie producers recently admitted that gaining access to the Chinese market is now so uncertain that they no longer factor potential Chinese income when planning their film budgets.

In spite of the obstacles, two American movies that premiered in China last year exceeded $100 million in box office earnings. According to Rosen, these were Disney’s “Alien: Romulus,” which earned $110 million in China, and Warner Bros.’ “Godzilla x Kong: The New Empire,” with a revenue of $132 million.

This year, local Chinese films have taken the lead, with “Ne Zha 2” being one of the highest-grossing movies ever made. Interestingly, it has managed to make an impressive impact in the U.S., raking in $21 million, including earnings from Imax screens, as reported by Box Office Mojo.

Hollywood Inc.

In 2012, when the United States and China reached a significant agreement allowing access to China’s expansive movie market, Hollywood became quite eager.

Even if China doesn’t ban all Hollywood films, experts predict a dramatic slowdown.

Regarding the movies that could be accepted by the Chinese government, they won’t actively endorse or give them much publicity,” as Rosen put it.

American entertainment firms are preparing for further consequences as a result of the ongoing effects of international trade disputes worldwide.

Leading economists and bank executives, such as Jamie Dimon, CEO of JPMorgan Chase, have issued cautionary statements about potential long-term, disruptive outcomes from Trump’s tariffs. These could include persistent inflation and the risk of economic recession.

Hollywood Inc.

The U.S. film business still needs China. Does China need American movies?

Since Trump announced tariffs during his “Liberation Day” speech, entertainment stocks, like many others in the market, have taken a significant hit.

This month, both The Walt Disney Company and Warner Bros. Discovery have faced significant setbacks. Disney’s stock has dropped approximately 15%, whereas Warner Bros. Discovery has seen a decrease of almost 25% in its market value.

In simpler terms, Disney earns most of its income from its theme parks and experiences. A recession could lower tourist numbers and attendance at these parks. Additionally, analyst Matthew Dolgin suggests that there may be less international tourism coming to the U.S., especially from Canada, due to strained foreign relations.

Warner Bros. Discovery has been working diligently to manage the substantial debt of over $40 billion that they accumulated when they purchased HBO, CNN, and the Barbie studio in Burbank about three years ago.

In many highly-leveraged companies, the stock performance may be fragile, potentially due to concerns about credit becoming more restrictive,” Dolgin penned down.

Analysts predict a potential decrease in television ad spending due to concerns about an approaching recession. This market, preparing for its significant “upfront” sales period in New York next month, has been unstable following the entry of Netflix and Amazon’s Prime Video into the advertising market that was traditionally held by TV networks. Struggling cable channels may experience even greater difficulties retaining viewers due to cord-cutting, according to analysts.

If consumers decide to save money, there might be an increase in the number of people avoiding theme parks, including the upcoming Epic Universe by NBCUniversal in Orlando, which is scheduled for launch next month and has a $6-billion investment riding on the growth of Florida’s tourist industry.

Business

TikTok is granted an additional stay of execution before April 5, allowing it time to either be sold or risk a nationwide prohibition in the United States.

The process of striking international business deals has suffered a setback recently. Just last week, it was announced that the planned acquisition of the well-known TikTok app by American investors from the Chinese company ByteDance has been postponed due to ongoing trade disputes.

Due to concerns about national security, Congress passed a legislation last year which was later signed by President Biden, prohibiting the use of the app within the U.S., unless ByteDance agreed to relinquish control. This law was scheduled to take effect on January 19th, but as one of his initial actions, former President Trump extended the deadline.

Over the past week, the president issued a new decree, extending TikTok’s operation by an additional 75 days.

There’s a potential advantage for American entertainment production: a weaker U.S. dollar might increase filming costs abroad, even in Europe, which has been popular for film and TV productions. The devaluation of the currency could lead studios to shoot their projects back in the U.S., although it might not be Los Angeles due to its high labor costs, according to unnamed media executives.

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2025-04-09 00:01

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