Trump’s Cinema Tariffs Aim to Shatter Global Film Industry: Experts Alarmed

Donald Trump’s recent declaration that all films produced abroad and imported into the United States will now face a 100% tariff has sparked widespread concern across Hollywood and key international movie production hubs, including Canada, the UK, Australia, New Zealand, and European nations like Hungary and Italy. These countries are known for hosting numerous American film productions.

Trump’s announcement, delivered with his characteristic flair for drama and capped off with the emphatic statement “WE WANT MOVIES MADE IN AMERICA, AGAIN!” in all caps, has fueled intense speculation and resistance within the movie industry. This response is driven by concerns over how these tariffs might be implemented, especially given the disorderly manner in which previous tariffs were introduced during his administration.

The specifics of how a tariff on movies would be enforced remain ambiguous. Trump’s policy seems to be partially driven by China’s recent restrictions on the import of Hollywood films as a countermeasure in their ongoing trade dispute with the US. However, applying a similar quota system in North America seems impractical at best. Films are no longer tangible goods that simply pass through customs, and their production often involves a complex blend of international financing, global talent, and revenue from multiple countries. Some are small-scale ventures, while others are massive enterprises with budgets that surpass the economic output of smaller nations. Moreover, the digital age has transformed the film industry into a global enterprise that operates too swiftly for the consistent application of traditional financial barriers.

Trump’s actual target seems to be the practice of Hollywood studios outsourcing their film production overseas to reduce costs and utilize diverse, appealing locations. For example, the recent Tom Cruise movie ‘Mission: Impossible – The Final Reckoning’ was primarily filmed in the UK, including at Longcross studios in Surrey and the Lake District, but also involved locations in Malta, Norway, South Africa, and aboard an American aircraft carrier in Italy. Similarly, Marvel’s latest blockbuster ‘Thunderbolts*’ was shot in Atlanta, Georgia, but featured a significant scene at the Merdeka 118 skyscraper in Kuala Lumpur, Malaysia, with its musical score being recorded at London’s Abbey Road studios.

The financial implications for Hollywood are significant. While North America remains the largest single market for box office sales, with around $8.8 billion in revenue in 2024, this is significantly outpaced by international earnings, which reached about $21.1 billion in the same year. Hollywood’s global strategy, including shooting in various locations and casting actors to appeal to specific markets, is designed to capture a large share of these international revenues.

This raises several questions: What criteria will determine whether a movie faces tariffs? Will tariffs apply only to theatrical releases, potentially pushing distributors towards streaming platforms? Will streaming releases be rebranded as “TV shows” to avoid tariffs? What exactly would be taxed? It’s uncertain whether a film like ‘Ghostbusters: Frozen Empire’, primarily produced in the US but filmed in the UK, would be subject to import duties. Additionally, would the distributors of foreign films have to pay a tariff to release them in the US? And since streaming services operate on a subscription model, how would tariffs apply to individual films viewed on these platforms?

More realistically, Trump seems to be targeting the tax subsidies that allow Hollywood to save significantly when they shoot in countries offering financial incentives. For instance, it was recently disclosed that Universal Studios received £89 million from UK taxpayers for filming ‘Jurassic World: Rebirth’ in Elstree, Hertfordshire. This has contributed to a nearly 40% decline in film production in Los Angeles over the past decade, according to FilmLA. Meanwhile, other US states like New York and Georgia are attracting productions with their own tax incentives. In response, California Governor Gavin Newsom, who has frequently clashed with Trump, announced a $750 million initiative to revive the state’s film industry. Trump’s tariff announcement appears to be a direct response to Newsom’s legal challenge against his use of the International Emergency Economic Powers Act of 1977 (IEEPA) to impose tariffs in other sectors.

The most feasible approach for Trump might be to impose tariffs on any financial support that films receive from foreign governments, rather than taxing cinema tickets or streaming subscriptions. Nevertheless, the impact of such tariffs could be severe. Recent statistics from the British Film Institute (BFI) indicate that in 2024, £4.8 billion ($6.37 billion) of film and high-end TV production spending in the UK came from international sources, accounting for 86% of total film and TV production costs in the country. The Australian film industry could lose up to AUS$767 million. A recent initiative to expand studio capacity in the UK, intended to boost revenue, might suffer immediately. Moreover, the forecast for the US domestic industry is bleak, as rising production costs, coupled with the loss of foreign tax incentives, could threaten the viability of many mid-level projects.

Despite Governor Newsom’s suggestion that Trump’s announcement might be merely a “distraction”, the film industry remains on edge, waiting to see how these proposed tariffs might actually be implemented.