Movies

Why Trump’s ‘100% Tariff’ Proposal for Foreign Films Doesn’t Make Sense

BBG News

In his social media post on Sunday night, President Donald Trump expressed concern about the rapid decline of the American movie industry. He argued that other countries are luring filmmakers and studios away from the U.S., causing devastation in places like Hollywood. Trump considers this a strategic threat by foreign nations and a means of propaganda. To counteract this, he has authorized the Department of Commerce and the United States Trade Representative to immediately initiate a 100% tariff on any movies produced abroad that are imported into the U.S., with the aim of encouraging movie production within America once more.

Commerce Secretary Howard Lutnick responded on X: “We’re on it.”

However, according to experts, it remains unclear as to how this policy might be implemented effectively and who exactly would bear the brunt of this proposed tariff.

Kathryn Arnold, an entertainment consultant, states that while it’s not expected for the U.S. government or the President to grasp the intricacies of movie-making, it’s important to realize how intricate and interconnected the worldwide film market is, from production to distribution. It’s bewildering and illogical when policies are imposed that have such a devastating impact on this complex network.

Although the President correctly recognized a genuine issue – the relocation of film production outside the US – experts contend that Trump’s preferred method, imposing tariffs, may not be effective in addressing this problem.

So far in Trump’s global trade conflicts, tariffs have been imposed on imported goods, which America primarily buys more than it sells. On the other hand, foreign films represent intellectual property and are part of the worldwide service trade sector, where the U.S. actually exports more than it imports.

The idea that appears to be guiding the Trump Administration is this: by making foreign manufacturing more attractive for any aspect of U.S. industry, they believe domestic manufacturing will thrive instead. Consequently, if there are tariffs on imported goods, the intention is to stimulate domestic production. Tom Nunan, a lecturer at UCLA’s School of Theater, Film and Television, suggests that given this approach, it was only a matter of time before they expanded it into entertainment as well.

As a movie enthusiast, I’d say: “Given the high costs associated with creating films and TV shows domestically or importing them from overseas, it seems logical that production might resume in the U.S., if we go by my Administration’s thinking. However, it’s not as simple as flipping a switch; it’s not just black and white.

Outside the White House on Sunday evening, Trump expressed his viewpoint to reporters: “Other countries are taking away our filmmaking abilities from the U.S.” He further stated that he has conducted extensive research over the past week and emphasized that “Hollywood is being undermined” and “if filmmakers refuse to produce movies within the U.S., then we should impose a tax, or tariff, on foreign films entering our market.

In recent years, Hollywood has experienced a drop in film production, partly due to escalating labor expenses. However, Arnold suggests to TIME magazine that Trump could potentially halt this trend by providing incentives like tax breaks for U.S.-based productions, which some foreign locations and cities also offer, as well as several U.S. states. Yet, it’s important to note that such a measure would only affect one facet of filmmaking, since many films are shot in multiple locations. Furthermore, Arnold noted that numerous movies are jointly produced by various production companies from different countries.

Making rewards contingent on certain elements of production would be significantly simpler than having to decide if a movie is “American” or “international” for the purpose of imposing penalties on the latter.

In simpler terms, the U.S. Trade Representative’s office explains that while services aren’t taxed with tariffs, they can still face trade obstacles such as regulatory hurdles. For instance, in the realm of film and entertainment, setting specific limitations might result in a significantly reduced freedom of media within the country.

In China, films not produced by locally licensed companies, with a maximum 49% foreign ownership, face stringent censorship and quotas. These films must go through state-controlled distributors. Recently, in retaliation to Trump’s tariffs on Chinese goods, the Chinese government announced they would slightly lower the number of American movies permitted into their vast, tightly managed market.

There’s an additional concern that other nations might respond with countermeasures if a tariff is imposed on foreign films. Given that the film industry is one of America’s leading service exports, as indicated by the most recent Motion Picture Association economic impact report, it consistently contributes a trade surplus in major global markets from 2023 onwards for the U.S. William Reinsch, an economic adviser at the Center for Strategic and International Studies and former president of the National Foreign Trade Council, shared with Reuters that “we stand to lose more than we might gain.

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2025-05-05 13:08

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