Filmmakers and Hollywood financiers are baffled, to say the least, by President Trump’s announcement that he wants a 100% tariff on movies produced outside the United States.
Several movie studio and streaming industry executives who spoke with CNN are downright apoplectic because, they believe, the president hasn’t thought about the ramifications of his proposal, which could decimate an iconic industry.
“On first blush, it’s shocking and would represent a virtually complete halt of production,” one industry insider remarked. “But in reality, he has no jurisdiction to do this and it’s too complex to enforce.”
Other sources are taking a more open-minded view, asserting that Trump is instigating a dialogue about a real issue — so-called “runaway production” — that has left many Americans in the movie and TV production sector out of work.
But the prospect of film levies has injected even more uncertainty into an already-unsettled business. Shares of Netflix and other major entertainment companies fell Monday as investors digested Trump’s confusing comments.
“In its current form, the tariff doesn’t make sense,” Jay Sures, vice chairman of United Talent Agency, told CNN.
American actors and directors would generally prefer to work close to home. But “the fact is it’s cheaper for Hollywood studios to pay for everyone to get on planes, pay for hotels, because the cost of labor, lack of rebates, and the ability to make things overseas is infinitely cheaper,” Sures said.
Sures noted that it can be significantly cheaper to make movies abroad, so a blanket tariff “has the ability to bring the movie business to a standstill – which is the last thing Hollywood needs after dual strikes and a content recession.”
Some of the industry sources who spoke with CNN doubt that any such tariff plan will actually be implemented. As intellectual property, movies are a form of services – not goods. Services are not ordinarily subject to tariffs, and it’s unclear how Trump’s tariffs on foreign movies would work.
Furthermore, Trump’s assertion that foreign film production constitutes a “national security threat” may not withstand legal scrutiny.
But entertainment industry leaders are taking the possibility seriously. Multiple executives have reached out to Commerce Secretary Howard Lutnick about the tariff proposal, according to two sources familiar with the discussions. Lutnick on X responded to Trump’s tariff demand Sunday night, saying, “We’re on it.”
Trump’s social media post may have been just an opening gambit. In the Oval Office Monday, Trump said he would hold meetings with Hollywood executives before making a final decision.
“We’re going to meet with the industry; I want to make sure they’re happy about it,” Trump said.
The belief that Hollywood needs a boost crosses party lines. When Trump took office, he named Jon Voight, Mel Gibson and Sylvester Stallone as his emissaries to Hollywood, though it was never particularly clear what that designation would mean.
Trump met over the weekend with actor Jon Voight at Mar-a-Lago to discuss plans for reviving the American film industry, according to a person familiar with the matter. Voight had been been developing a plan along with his manager, Steven Paul, and the plan included ideas for tax incentives, but not specifically on new tariffs, the person said.
On Monday a White House spokesperson, Kush Desai, said, “while no final decisions on foreign film tariffs have been made, the Administration is exploring all options to deliver on President Trump’s directive to safeguard our country’s national and economic security while Making Hollywood Great Again.”
The White House’s reference to “all options” may calm some nerves, since Hollywood lobbyists have been pushing for carrots (like a federal tax incentives for films) rather than sticks (like a tariff) for some time now.
Shifting away from Hollywood
Movie and television production, once centered in and around Hollywood, has gravitated to other US states and increasingly to other countries owing to tax incentives and other financial calculations.
A wide array of movies, from “low-budget indies to studio blockbusters,” are “currently being made in countries like the U.K., France, Germany, and Hungary,” the entertainment trade magazine Variety noted on Monday while conveying “shock and disbelief across the European film industry.”
Trump made the idea sound simple when he spoke with reporters at the White House Sunday night.
“Other nations have been stealing the movies, the moviemaking capabilities, from the United States,” he said, apparently referring to the growing number of movies that are produced in other countries like Canada.
“We should have a tariff on movies that come in,” Trump said, possibly referring to movies that are financed and distributed by American companies but filmed elsewhere.
The Motion Picture Association of America, the organization representing major US studios, declined to comment on Trump’s announcement. But the MPA released a report in 2023 showing the US film industry runs a $15.3 billion trade surplus with foreign markets, amounting to three times the value of films that are imported. However, it’s not clear if the MPA included domestic films that were produced abroad.
How would it work?
The questions about Trump’s movie tariffs are voluminous. Will movies made by American companies but set in other countries – say, a World War II historical drama – be taxed for filming in the places where they’re set?
What about movies that are produced partly in the United States and partly in other places?
Or, as Sures asked, “if two minutes of the movie is shot overseas, does that deserve to be taxed?”
Some of the industry executives wondered aloud if Trump’s idea was about punishing Canada, where many films are now made due to tax incentives.
One of the sources asked, speaking of left-leaning Hollywood, “Is he trolling us because we didn’t vote for him?”
And one executive asked if Trump had any real sense of how modern TV and movie production works: “Has anyone told him what this will do to James Bond, Harry Potter, Dune? Where are we supposed to shoot Emily in Paris?”
Source: CNN
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