☕ Is Hollywood the next tariff battle?

Good morning!

There’s been one image that’s kept coming into my mind this week as we broke down the tariff movements, particularly in relation to the increased measures placed on China - and that’s a scoreboard. It has really felt like a long game of baseball, broken up into a series of innings. At the moment, the score is 145-145. There’s plenty more to come.

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Some headlines from this morning:

• Markets have continued to fall despite President Trump’s announcement that the reciprocal tariffs announced last Wednesday would be paused, except for China’s. The President acknowledged that “transition problems” affected the stock market, but the tariffs would lead to more significant long-term economic growth. The President clarified, after a rapid string of tit-for-tat tariff increases, that some Chinese products would be subject to 145%, not 125%, tariffs due to a 20% tariff imposed earlier this year that punishes fentanyl-producing countries.

• New inflation figures released by the Bureau of Labour Statistics show that inflation grew by 2.8% in March, surprising economists who expected a far higher figure. Other data that tracks “core inflation” by excluding volatile market factors showed that inflation in March had grown at the slowest rate since 2021. President Trump’s administration said the slowing inflation was evidence of strong economic management, but economists warn the recent tariff announcements may create a new “inflation cycle”.

• The US Ambassador to Ukraine will step down after three years. Ambassador Brink’s resignation comes as a Ukrainian delegation is due in the US to discuss the long-awaited Ukrainian minerals deal, which President Trump insists will act as payment for past US aid and offer unspoken security guarantees. No reason was given for Brink’s resignation. Earlier this year, Ukrainian President Volodymyr Zelensky accused the ambassador, a vocal opponent of Russia during the Biden administration, of not publicly condemning Russia in 2025.

• A New York sightseeing helicopter carrying six people, including an executive of a major Spanish technology company and his family, crashed into the Hudson River on Thursday, leaving no survivors. The cause of the crash is unknown, and efforts are underway to recover the wreckage. The helicopter was performing an aerial tour of New York. It had just completed a loop of the Statue of Liberty and was heading back towards New Jersey before witnesses and mobile phone footage show it crashing into the Hudson River at speed.

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A Russian-American citizen has been released from a Russian prison after 15 months as part of a high-profile prisoner exchange in Abu Dahbi.

33-year-old Ksenia Karelina was swapped for Arthur Petrov, a Russian-German citizen convicted of smuggling microelectronics.

This is the second prisoner swap of President Trump’s administration in two months and comes as US and Russian diplomats meet in Turkey to normalize diplomatic ties after years of non-communication.

The arrest

Karelina made a $51 donation to a Ukrainian charity at the start of the Russian invasion of Ukraine.

Last year, Karelina visited her Russian family in Yekaterinburg, 1000 miles east of Moscow and was arrested.

She was charged with high treason for the $51 donation, which Russian authorities found on her phone. She subsequently pleaded guilty to making the donation and was sentenced to a 12-year prison term.

The US classified Karelina as “wrongly detained”, meaning her detention was politically motivated.

Best boyfriend ever?

Ksenia Karelina's boyfriend, UFC fighter Chris van Heerden, has spent the duration of her detainment advocating for her return.

Ultimately, Karelina’s release was secured not only by a thaw in Russia-US relations but also by a call to President Trump from UFC CEO Dana White, a close friend of the President and Heerden’s boss.

"Dana White … said it's the … relationship of one of the fighters … and we spoke to President Putin about it, and they made a deal," said President Trump.

Senator of State Marco Rubio and CIA Director John Ratcliff also played a role in securing the exchange.

The swap

Petrov and Karelina were swapped on the tarmac of an Abu Dhabi airport in the early hours of Thursday morning.

Petrov, who was arrested in Cyprus in 2023 before being extradited to the US and charged with trying to smuggle US microelectronics to Russian military factories, told Russian authorities he was fine but tired.

Karelina was pardoned by Putin the day before her release, and Heerden said he was “overjoyed” the “love of his life” was coming back. Karelina touched down in the US on Thursday evening.

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China announced it will restrict the screening of Hollywood movies to local audiences as part of a suite of economic penalties introduced in the escalating trade war with the US.

This week, President Trump paused all global reciprocal tariffs except China, with Chinese exports to the US subject to a 145% tariff. US exports to China are currently under an 84% tariff after a series of escalations.

Experts say the move won’t have a dramatic economic impact on the US film industry, but was instead a symbolic rejection of American cultural power.

Context

China has a rigorous censorship policy that includes restrictions on internet access and foreign media. The China Film Administration (CFA) monitors and restricts foreign film imports, particularly for anti-China sentiment.

The CFA may also restrict access to movies if relations between China and the filmmaker's country of origin deteriorate. In recent years, China has also restricted foreign films to build its own domestic filmmaking business, which is now the second largest in the world behind Hollywood.

Usually, ten Hollywood films per year are released in the country, which is the world’s second-largest film market. In 2024, 42 US movies were released in an indication of thawing relations.

Under the newly-announced measures, the number of releases will be limited to under ten - but the exact number is unknown.

Stocks in Disney, Paramount and Warner Bros all declined on the news.

Is Hollywood concerned?

Hollywood has been recovering from the COVID-19 shutdown and multiple writers' strikes.

In the past three years, Chinese audiences have contributed about 10% of an average US blockbuster film’s revenue - an increase from pre-pandemic levels.

Last year, the American film “Godzilla x Kong: The New Empire” recorded $132m in Chinese ticket sales alone.

President Trump commented on the move by telling reporters: “I think I’ve heard of worse things.”