It’s no secret that the film industry in America has been struggling with job losses and studio closures. For years, studios and production facilities have found more favorable conditions elsewhere and opened locations where labor is cheaper and tax credits more plentiful. This week, President Trump announced/is considering/will seek input concerning tariffs (the situation is fluid) on films made outside the US. However, his multiple announcements have left many with a long list of questions, including whether such action would actually benefit the industry in the US or whether it would be better served with other actions such as a national tax incentive program that would enable US studios to compete.
Each new day comes word of a new tariff being considered or enacted. What is next on our president’s tariff list?
Movies.
This past Sunday, news began circulating that President Trump had announced a 100% tariff on movies made overseas in an attempt to boost film production here in the US.
As is often the case with these announcements, it was made on Trump’s own Truth Social platform. There, he wrote: “I am authorizing the Department of Commerce, and the United States Trade Representative, to immediately begin the process of instituting a 100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands. “WE WANT MOVIES MADE IN AMERICA, AGAIN!”
Trump went so far as to state that offering incentives to draw filmmakers and studios away from the US amounted to “a concerted effort by other nations and, therefore, a National Security threat.”
Exactly when and how this would be done was not divulged. And, it appears the announcement caught many studio executives by surprise. Then, on Monday, the White House began walking that back, stating that no final decisions on this matter had been decided, although, according to the Hollywood Reporter, it was told “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.”
You can bet that if this tariff is imposed, it will be theatergoers who will pay in the form of higher ticket prices.
The Hollywood saga
It’s no secret that the movie industry in the US has been struggling. COVID dealt it a substantial blow, followed by another one-two punch delivered by the writers’ and actors’ strikes. Even prior to these setbacks, Hollywood—once the center of the entertainment and film industry—began losing its footing. Certain countries began offering substantial tax breaks to have some or all of the work done abroad. This gave rise to what many called “Hollywood North,” as film and TV productions began moving to Canada.
What’s more, during the past two decades, former California mega studios began opening new headquarters or large co-facilities north of the border in Vancouver and Toronto, enabling the studios to be more competitive. (Filmmaking is an expensive endeavor.) Names that were once associated solely with Hollywood now have Canadian addresses, including Lionsgate, Sony Pictures Imageworks, Amazon MGM Studios, even Walt Disney Animation.
In fact, you’d be hard-pressed to find a major US studio that doesn’t have a facility in Canada, the UK, India, or elsewhere in the world, for that matter. Filmmaking has become a global industry, with production hubs spanning the world, from India, Africa, Eastern Europe to Southeast Asia. With a growing number of foreign countries constructing state-of-the-art production facilities and investing in high-level training, competition will only increase.
There are many reasons for this, such as audience taste for more exotic locations and movie flavor, themes that reflect local cultures, but mostly because it is cheaper.
Productions and studios are being lured away from Hollywood with tax incentives—some quite substantial. Canada, for instance, offers federal and provincial tax credits. Domestically, certain US cities and states (Atlanta, Chicago, New Orleans, to name a few) have generous tax incentives, making their locale especially attractive to movie makers. Maybe it’s time for a nationwide tax incentive.
As film and TV audiences demand “bigger and better” from the movies they watch, US studios have found themselves struggling to keep their heads above water as they carefully watch the bottom line. Sadly, we have witnessed a number of top-tier VFX studios shutter their doors, the most recent being Technicolor and its subsidiaries.
In their quest to turn a profit, studios have been increasingly playing it safe with sequels and cookie-cutter projects. Studios are hesitant to take a big risk, especially when it is attached to an investment exceeding a hundred million dollars or more, and no guarantee of success. This has resulted in some movie fans looking for something different, which a foreign-made film often offers. (Remember the South Korean film Parasite,which won Best Picture Oscar in 2020?)
Is a tariff the ticket?
Regarding the tariff/possible tariff/probably tariff, the bomb has been dropped (or was it just some type of warning shot?), and people are waiting for the explosion. What kind of impact will result? And how will it work, anyway? Granted, there are films that are 100% foreign-made. However, so many films, even those that we think of as Hollywood films, have some aspect of work coming from outside the country—sound, visual effects, editing, cinematography, acting, coloring, finishing, site and scene locations, etc. How does one assess how much of a production would be subject to a tariff? Determining that would be a logistical nightmare.
Does American want to restore moviemaking and its associated jobs in the US?
Yes.
Would a tariff do that?
That is the big question, especially in light of so many other issues at play affecting the industry.
Circling back to another big question: Who will ultimately cover the cost of a foreign-made movie tariff? Theatergoers? After all, studios, would have no choice but to pass along the added price to consumers—they can’t afford not to. Theaters have been struggling to stay afloat and have been pushing for longer theatrical windows, to encourage people to see films in theaters first. What will elevated prices do to an industry already struggling? How many more small local theaters will shut down? In 2024, the US movie theater industry experienced significant closures, with over 3,000 screens shutting down nationwide.
Would a tariff extend to streaming? How in the world would that even work?
Would a tariff be for theatrical releases only? What about the ever-growing streaming industry? There’s also the issue of TV productions and series. Would other countries impose reciprocal tariffs on US-made movies? Hollywood films are still highly desired worldwide, but a reciprocal tariff could lead to fewer films made at a higher cost and result in lower earnings. Just look at box-office numbers. A substantial portion of a film’s revenue comes from abroad—the newly released Thunderbolts raked in $74 million domestically and $160 million worldwide. (It’s worth noting that principal photography took place in Atlanta though some filming was done in Kuala Lumpur, Malaysia.)
Another big question is, where is the trade imbalance in the film industry? Isn’t that the point of all these recently imposed US tariffs? According to the Motion Picture Association’s 2023 National Trade Estimate Report, this industry is one of the few that consistently generates a positive balance of trade, with a reported surplus of $15.3 billion. in 2023). Not to mention, tariffs are often imposed on goods rather than services; most consider movies in the latter category.
At this time, there are more questions than answers as this script continues to evolve.
Editor’s note: Recently, a meme of an AI image of a jacked Donald Trump as a Jedi has been circulating on social media after being posted on the official White House account in celebration of May 4th (May the fourth be with you). Since then, those familiar with the Star Wars franchise have informed them on social media that villains such as the Sith have the color of lightsaber (red) that the president is holding. They might also want to know that filming for the upcoming Star Wars: Starfighter will begin as early as this fall—with a significant portion set to occur at Pinewood Studios in the UK.
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