Angela Palumbo

The U.S. trade war with China has just claimed another victim -- Hollywood.

Walt Disney and Warner Bros. Discovery stocks were falling sharply on Thursday after China announced it's cutting imports of American films. The China Film Administration said that the U.S.'s latest tariff decisions has led to the move.

Shares of Disney and Warner Bros. were down 8.7% and 15%, respectively, underperforming the broader stock market on Thursday. The S&P 500 was off 5.8%, following a notable rally on Wednesday. That rally came after President Donald Trump made major changes to his tariff policies.

Trump wrote on his social-media website Truth Social Wednesday that he was implementing a 90-day pause on tariffs for most countries whose rates were above 10%. That sent the stock market soaring. But he also said he's increasing China's tariff rate to 125%, further intensifying the trade war between the world's two largest economies. Barron's has reported that the tariffs are more like 145% when adding in the administration's previous levies tied to the emergency declaration on fentanyl.

"The wrong action of the U.S. government's indiscriminate tariffs on China is bound to further reduce the favorable impression of domestic audiences on American films," the China Film Administration said.

Neither Disney or Warner Bros. responded to a Barron's request for comment.

While U.S. ticket sales are the largest contributor to total box office performances, China is an important segment. According to Box Office Mojo, Disney's Inside Out 2 was the best-performing film worldwide in 2024. The movie brought in $1.7 billion worldwide, with $653 million of that coming from the domestic box office and $47.4 million coming from China. Warner Bros.' Dune: Part Two was the seventh-best-performing film worldwide in 2024 at $714.6 million. It made $282.1 million in the domestic box office, and $49 million in China.

Disney lists "international, political or military developments, including trade and other international disputes," in its most recent 10-K filing as potential risks to the company's business. Similarly, Warner Bros. said in its most recent 10-K that because the company distributes programming outside of the U.S., the business is subject to certain risks, including, "laws and policies affecting trade and taxes, including tariffs."

Write to Angela Palumbo at angela.palumbo@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 10, 2025 14:39 ET (18:39 GMT)

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