China is signaling it may target U.S. services exports as payback for U.S. President Donald Trump’s record tariffs, putting a lesser-known but sizable part of their trade relationship at risk.
While most of the focus in Washington is on the U.S. goods deficit with China, services have long been a bright spot for American companies. Last year alone, the US sold a net US$32 billion in services to China — including education, travel, and entertainment — and nearly US$300 billion globally.
That flow could now be in Beijing’s sights. Two prominent Chinese bloggers posted identical lists of possible countermeasures this week that included curbs on U.S. services. Authorities have already moved to cut the number of American films allowed in Chinese theaters, suggesting broader retaliation beyond goods may be underway.
The U.S. services surplus isn’t just with China, but a pattern seen with many of its trading partners. Singapore Prime Minister Lawrence Wong said this week that that side of the story has been “completely ignored” in the broader trade debate.
With tensions rising and services in the spotlight, here’s a look at the areas of U.S.-China trade that could be next in line for retaliation after Trump hiked the levies imposed this year on China to 145 per cent:
Education
Almost a third of U.S. services exports to China were related to education, coming from tuition and living expenses for the 270,000 Chinese students studying in the U.S., according to the most recent data from the Institute of International Education.
While that’s about 100,000 fewer students than before the pandemic, China still ranked second after India in terms of international student numbers.
Travel
Travel is another major U.S. export to China, thanks to the millions of Chinese tourists visiting each year, which far outnumber the Americans who travel in the other direction. Still, the value of that travel remains well below pre-pandemic levels, and growing political tensions might reduce that further.
Beijing this week issued a warning against travel to the U.S., and the Ministry of Education cautioned students about potential security risks related to studying in “certain U.S. states,” citing a new bill passed in Ohio.
Financial Services
U.S. banks and insurers ran a US$2.5 billion surplus with China in 2023, down from the peak in 2019. The outlook for the industry has dimmed. Just a few years ago, there was optimism when China began opening its financial sector more to foreign firms.
Now, that enthusiasm has faded. Most U.S. banks are in caution mode, focusing on keeping costs low and steering clear of missteps or reputational risks as tensions mount.
Computing Services
Computing services are another area where the U.S. runs a surplus with China. Companies like Microsoft Corp. and Amazon.com Inc. exported US$1.6 billion more in software, cloud computing and other digital services to China than the U.S. imported in 2023, the most recent year for which a data breakdown is available.
Films and entertainment
The U.S. is still running a surplus in entertainment exports to China — including books, movies and TV shows — but that gap shrank in 2023 to its lowest in four years. The drop was driven by a decline in U.S. exports and a rise in Chinese imports. With tensions escalating, that trend may continue.
This week, China announced it would “moderately reduce” the number of Hollywood films allowed into the country, a move seen as retaliation for U.S. tariffs. This contributed to a drop in shares of major entertainment companies, including Walt Disney Co., Warner Bros. Discovery Inc. and Paramount Global.
“The wrong action of the U.S. government to abuse tariffs on China will inevitably further reduce the domestic audience’s favorability toward American films,” the China Film Administration said.
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--With assistance from Amanda Wang.
©2025 Bloomberg L.P.
