China has announced plans to cut back on US film imports, threatening one of Hollywood’s most lucrative international markets. The move comes just days after the Trump administration ramped up tariffs on Chinese goods to 125%, escalating trade tensions between the world’s two largest economies.

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In a statement, the Chinese Film Administration (CFA) said it would “moderately reduce the number of American films imported,” in response to what it called the US’s “wrong move.” The decision follows long-standing friction over trade, but this time targets the soft power of entertainment — a space where Hollywood has historically dominated. The CFA said the developments will “inevitably further reduce the domestic audience’s favourability towards American films”.

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“We will follow market rules, respect the audience’s choice, and moderately reduce the number of American films imported,” the CFA said. “China is the world’s second largest film market. We have always adhered to a high level of opening up to the outside world and will introduce more excellent films from the world to meet market demand.”

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The exact number of cuts hasn’t been revealed, but given China’s strict cap of 34 foreign films per year, even small reductions could have outsised impact.

Hollywood’s China problem

For more than a decade, China has been an essential market for US studios. Since 2020, it has regularly outpaced North America as the world’s largest box office market. Big-budget blockbusters increasingly rely on Chinese audiences to hit global profit targets — especially as US ticket sales remain sluggish post-COVID.

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But that relationship has always been delicate. Foreign films in China face quota restrictions, censorship reviews, and revenue-sharing caps — studios typically earn just 25% of the Chinese box office, compared to over 50% domestically.

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Now, with China favouring homegrown hits and political tensions rising, the playing field looks even steeper. In recent years, domestic films have claimed more than 80% of China’s box office, up from around 60% in the mid-2010s. That leaves even less room for US studios.

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The latest move adds to a growing list of friction points for Hollywood, which has seen its influence in China slowly shrink amid rising nationalism, tighter content controls, and shifting audience preferences.

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By targeting film — rather than traditional goods — China is signalling that the cultural and soft power aspects of the US economy are also fair game in the trade war era. For Hollywood, it’s both a commercial and symbolic setback.