Movies

Hollywood’s reaction to Trump’s movie tariffs idea: Confusion, dread and a little hope

BBG News

On Monday, Hollywood producers hurriedly analyzed President Trump’s suggestion of high import taxes on films not produced in the USA – a surprising announcement that could significantly alter the way movies have traditionally been created for decades.

On Sunday evening, Trump declared his intention to impose a full customs duty on films originating from foreign countries. This tariff plan, similar to others instituted by Trump, seeks to reinvigorate the film industry within our borders.

Many studios choose to film numerous feature movies in Canada, the UK, Bulgaria, New Zealand, and Australia due to the attractive incentives they provide to secure well-paid positions, as well as the opportunity for these countries’ iconic landmarks to be showcased on the silver screen.

Trump posted on his Truth Social platform that “The American Film Industry is experiencing a rapid decline, almost disappearing.” He also noted that “not only Hollywood, but many other sectors in the United States, are suffering significant damage.

Studio executives were caught off guard.

As a passionate cinephile, I’ve often pondered about the aspirations of many filmmakers to work within the U.S., and one thing that consistently comes up is their desire for the government to introduce a national tax credit system. The idea of tariffs, however, seems more detrimental than protective, as it could escalate production costs rather than ward off potential threats. The concept of slapping a tariff on movies remains vague and unclear, making it challenging to envision its practical implementation.

One movie industry insider noted that the details remain unclear at this point, and they don’t foresee a quick resolution. They questioned whether the tariffs apply to domestic or foreign productions, and if they target revenues or costs for these specific projects, or perhaps both.

Production incentives offered abroad have weakened the economic production sector in Los Angeles, which has struggled since the COVID-19 pandemic, labor disputes, and traditional entertainment companies pulling back financially after experiencing massive losses while trying to compete with Netflix on streaming platforms. The wildfires in Pacific Palisades and Altadena in January added further complications.

Television show, movie, and commercial production dropped by 22% in the initial three months of the year, as per FilmLA, a non-profit organization. (Compared to the first quarter of 2025)

Leading entertainment corporations chose not to provide comments on the matter. The president’s announcement ignited a whirlwind of inquiries, one of which was whether American companies like The Walt Disney Company, Warner Bros. Discovery, Amazon, and Netflix might face tariffs due to filming movies outside of the U.S.

Based on figures provided by the Motion Picture Association, it appears that the United States enjoys a trade advantage of approximately $15.3 billion due to its exportation of entertainment products.

As a cinephile and industry analyst, I can confidently say that this film has stirred an unprecedented wave of curiosity within the movie-making sphere. Indeed, it seems we’ve managed to carve out a significant edge in this competitive landscape.

On Monday, the White House advised that certain particulars are yet to be determined. In a statement issued by White House representative Kush Desai, it was clarified that no definite decisions concerning foreign movie taxes have been reached.

Hollywood Inc.

Workers across all tiers of Hollywood are uniting their efforts to advocate for a legislative change in the state’s tax incentive program. However, given the tight financial situation, gaining approval for this change is far from certain.

Some crew leaders applauded Trump’s instinct to protect American jobs.

As a devoted cinephile, I can’t help but voice my concern: Film studios are relentlessly pursuing low-cost productions abroad, which unfortunately comes at the expense of the hardworking American labor force that has been instrumental in shaping our beloved movie and TV industry. This statement is jointly shared by Sean M. O’Brien, Teamsters General President, and Lindsay Dougherty, Director of the Motion Picture Division.

But a movie tariff would be complicated in practice.

analogous to the automobile sector in Detroit, various stages of production are frequently carried out abroad, for instance, adding special visual effects, instead of happening within the United States.

In my perspective as a cinephile reviewer, it’s important to note that tariffs are usually applied when a physical product enters a country, requiring the importer to pay taxes before the goods can be released. However, movies, being digital entities, don’t pass through ports with physical borders. Instead, the distribution process for films is different, often involving digital platforms and licensing agreements rather than customs fees.

Tony Gulotta, from Ryan – a worldwide tax-centric company, pointed out that digital goods don’t fall under the usual taxation system, making it challenging to ascertain their worth.

Furthermore, I should note that the World Trade Organization currently maintains a pause on taxing digital trades, which continues until March 2026. This is an interesting aspect to consider in the ongoing discourse.

Officals from administration are planning to discuss with movie studio bosses and the Motion Picture Association regarding the foundation of potential tariffs. The aim is to gain understanding if these tariffs will depend on a film’s production cost, earnings, box office ticket costs, or subscription charges for streaming services.

A related query: Do TV series, a significant number of which are produced in Canada and the United Kingdom, fall under this category?

Frank Albarella, a media and telecommunications expert at KPMG, points out that this isn’t a trivial matter. It has the potential to cause significant disruption within the industry.

Hollywood Inc.

On his Truth Social account, the president advocated for significantly higher taxes (tariffs) on films produced outside of the country. This is because Hollywood has been struggling due to other governments providing substantial benefits and incentives to movie producers.

As a film enthusiast, I’ve found myself reflecting on the recent decision by our current administration to boost U.S. movie production. This move follows the appointment of an intriguing trio – Jon Voight, Sylvester Stallone, and Mel Gibson – as their “special envoys” to Tinseltown.

Over the weekend, Voight and his boss, Steven Paul, journeyed to Florida for a face-to-face discussion with Trump, where they presented their plan to him at Mar-a-Lago.

The strategy emerged following discussions with Hollywood unions, studios, and streaming platforms, and aimed to propose various methods to support the U.S. film industry. These suggestions encompassed federal tax breaks, co-production agreements with other nations, infrastructure grants, vocational education programs, and in specific cases, tariffs, as outlined by Paul’s production company statement.

In his statement, Paul noted that the global community learns about the American Dream through the American film industry, particularly Hollywood, which also serves as a significant driver of employment and career prospects.

But it was Trump himself who came up with the tariff plan, a White House official said.

Leading members of Congress cautioned that imposing tariffs might not be the most effective method for bolstering the U.S. movie industry.

If President Trump truly intends to keep America’s movie industry thriving and preserve production jobs within the U.S., as Representative Laura Friedman (D-Glendale) – a former film producer – suggested, I extend an invitation for him to join me in advocating for a national film tax credit that can match the advantages offered by incentives in other countries.

Runaway production, a longstanding phenomenon, has reportedly pushed California’s situation to the brink of crisis, as per statements from leaders.

These are some productions filmed in the U.K.: Netflix’s “Bridgerton,” Universal’s “Wicked” and “How to Train Your Dragon,” Warner Bros.’ “The Conjuring: Last Rites,” and Disney’s Marvel’s “The Fantastic Four: First Steps.

Besides the advantage of cheaper labor, studios have opted to relocate abroad to infuse local charm into their productions and cater to audiences residing on those continents. In some cases, up to 60% of a film’s earnings can originate from international viewers.

In simpler terms, if we impose high taxes (tariffs) on goods from other regions, they might decide to put similar taxes on our products as a response (reciprocal levies).

Next week at the Cannes Film Festival in France, I anticipate that the uncertainty surrounding the proposed policy might affect negotiations and deal-making.

According to Peter Marshall, the head of media insurance services at Epic Insurance Brokers & Consultants, senior creditors have voiced worries regarding its potential impact on the distribution process.

If one aimed to announce a bombshell comment that could dismay the independent film industry, the ideal moment would be now, just prior to the world’s largest market. Such a move, in my opinion, is likely to create a massive shadow over it.

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2025-05-06 02:31

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