China Curbs Hollywood Films, But Says It's Open to Talks

China said on Thursday it will curb imports of movies made in Hollywood in retaliation for the Trump Administration’s imposition of far higher tariffs on Chinese exports sent to the US.

The move came after Trump hiked tariffs for the second day running, for its tit-for-tat response to US levies, which now amount to 124% on all Chinese goods.

After three decades during which China annually imported 10 Hollywood movies, its National Film Administration said Trump’s increase of tariffs on Chinese imports would sour domestic demand for US cinema in China.

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“We will follow market rules, respect the audience’s choices, and moderately reduce the number of American films imported,” the NFA said on its website.

Chris Fenton, author of “Feeding the Dragon: Inside the Trillion Dollar Dilemma Facing Hollywood, the NBA, and American Business”, told Reuters the move was a “super high-profile way to make a statement of retaliation with almost zero downside for China”.

Hollywood films account for only 5% of the overall box office receipts in China’s market. And worse for Hollywood, China taxes that small amount 50% before any revenues go back to the USA,” Fenton was quoted as saying.

Hollywood studios receive only 25% of China’s box office whereas other markets give studios double that, he said.

“Such a high-profile punishment of Hollywood is an all-win motion of strength by Beijing that will surely be noticed by Washington,” Fenton added.

In 1994, China began importing 10 American films each year through the internationally recognised revenue-sharing distribution model. Imports including “Titanic” and “Avatar” became box office smashes in the Chinese market, making actors such as Leonardo DiCaprio and directors such as James Cameron household names among Chinese film lovers across generations.

China is the world’s second largest film market. However, in recent years, as local entertainment culture has bloomed, the enthusiasm of Chinese audiences for Hollywood movies has waned.

Since 2020, domestic films have consistently accounted for around 80% of annual box office revenue, up from around 60% previously.

On China’s all-time box office list, only one imported film ranks in the top 20 – “Avengers: Endgame”, with revenue of 4.25 billion yuan (close to $580 million). The remaining films in the top 20 are all domestic productions.

Ban on rare earth exports

The move follows export restrictions slapped on rare earth elements late last week, which aims to squeeze the supply of minerals to the West used to make weapons, electronics and a range of consumer goods.

That restriction could leave American manufacturers scrambling for fresh supplies of critical minerals they have relied upon for decades.

China produces around 90% of the world’s rare earths, a group of 17 elements used across the defence, electric vehicle, energy and electronics industries. The US has only one rare earths mine and most of its supply comes from China.

Beijing announced the controls late on Friday as part of a broader package of tariffs and company restrictions in retaliation for Trump’s decision to hike tariffs against most Chinese products to 54%.

The export curbs include mined minerals, plus permanent magnets and other finished products that will be difficult to replace, analysts said.

The move, which affects exports to all countries, not just the US, is the latest demonstration of China’s ability to weaponize its dominance over the mining and processing of critical minerals.

Seven categories of medium and heavy rare earths – samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium-related items – were placed on an export control list as of April 4, according to a Ministry of Commerce release.

Lockheed Martin, Tesla and Apple are among the US companies that use Chinese rare earths in their supply chains.

“China made that list strategically,” said Mel Sanderson, a director at American Rare Earths, which is building a Wyoming rare earths mine it hopes to open by 2029, and co-chair of the Critical Minerals Institute trade group. “They picked the things that are crucial for the US economy.”

The US government has stockpiles of some rare earths, but not enough to supply its defence contractors in perpetuity.

Beijing imposed outright bans on the export of three metals to the US early last week and slapped export controls on many others.

The moves to restrict heavy rare earths are especially important because China has even tighter control over these elements, said David Merriman at consultancy Project Blue.

“There is currently only one HREE (heavy rare earth element) focused operation outside of China, Myanmar and Laos,” he said, adding that China has close involvement in supply chains from Myanmar and Laos.

That mine, Serra Verde in Brazil, ships minerals to China for processing, Merriman added.

“China is willing to escalate,” said Nathan Picarsic, co-founder of the geopolitical consulting firm Horizon Advisory. “This is likely an opening salvo in an iterative game of negotiation with the US.”

‘Still open for talks’

Meanwhile, China’s commerce ministry said on Thursday that the country is still open to dialogue with the US, but said talks must be undertaken on the basis of mutual respect and equality.

“Pressure, threats and blackmail are not the right way to deal with China,” ministry spokesperson He Yongqian told a regular press briefing when asked about whether the world’s two largest economies have started tariff negotiations.

“The legitimate development rights of the Chinese people and the people of the world cannot be taken away,” she said.

“China and other countries’ sovereignty, security and development interests should not be infringed upon.”