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President Donald Trump has ordered the imposition of a 100% tariff on movies produced outside the US and imported into the country, CNN reported on Sunday. The announcement came via a post on Trump’s social media platform, Truth Social, where he voiced concerns over the state of the U.S. movie industry and its competition with foreign filmmaking.
Here’s everything you need to know about Trump’s latest move:
What Is Trump’s Proposal?
In his Truth Social post, Trump wrote, “The Movie Industry in America is DYING a very fast death. Other Countries are offering all sorts of incentives to draw our filmmakers and studios away from the United States.”
As a result, he said he had directed the U.S. Commerce Department and the U.S. Trade Representative to immediately implement a 100% tariff on any films produced outside the U.S. and imported into the country. The motive, Trump said, was to encourage more movie production to be done “in America, AGAIN!”
While the exact mechanism of this tariff structure remains unclear, it would represent a significant departure from traditional trade policies, as films, being intellectual property rather than physical goods, are generally not subject to tariffs, the report said. However, according to the U.S. Trade Representative (USTR), some services could be impacted by non-tariff barriers like regulations and tax incentives, which could, in turn, hurt the U.S. film industry.
Why Is This Happening?
Trump’s move comes amid growing concerns that foreign countries have been luring filmmakers and studios away from Hollywood by offering attractive tax incentives. Locations like Toronto and Dublin have become popular shooting spots due to these financial breaks, making it cheaper for productions to be made outside of the U.S, as reported by CNN.
Governor Gavin Newsom of California has already proposed a major tax credit to counter this shift and bring production back to Hollywood. Trump’s decision to impose a tariff, however, escalates the issue on a national scale, with the president calling the loss of U.S. film production a “national security threat.”
“Hollywood, and many other areas within the U.S.A., are being devastated. This is a concerted effort by other Nations and, therefore, a National Security threat. It is, in addition to everything else, messaging and propaganda!” Trump added.
What Are the Current Challenges in the U.S. Film Industry?
The COVID-19 pandemic hugely impacted the Hollywood film industry, leading to theater closures and a steep drop in movie ticket sales. For example, U.S. box office revenue topped nearly $12 billion in 2018 but plummeted to just over $2 billion in 2020 due to pandemic-related restrictions, according to CNN.
While movie theaters have seemingly rebounded, the number of releases has decreased by half, and box office revenues have not reached pre-pandemic levels, reports suggest. Streaming services have become increasingly popular, with many major Hollywood studios launching their own platforms, such as Disney+ and Max (owned by Warner Bros. Discovery, the parent company of CNN). However, aside from Netflix, many of these platforms have reportedly struggled to turn a profit.
Could a 100% Tariff Help Hollywood?
In theory, the 100% tariff on foreign films could help U.S. filmmakers by reducing competition from international productions. However, the logistics and economic implications of such a policy are complicated, the report said, adding that many Hollywood films are shot on locations in other countries, where the cost of production is cheaper due to tax breaks and lower labor costs.
For instance, some foreign cities offer tax incentives to attract film and TV productions, making it economically viable for studios to shoot in places like Canada or the U.K. Additionally, foreign crews often accept lower wages, which can lower overall production costs.
According to the report, imposing tariffs on foreign films could make these international locations even more attractive for filmmakers seeking cost-effective alternatives to U.S. production. The tariff might also push American studios to reconsider shooting locations, which could ultimately affect the global competitiveness of U.S. films, per CNN.
Is This a First for Trump’s Tariff Policies?
Trump is no stranger to using tariffs as a tool for trade policy. During his presidency, he implemented several rounds of tariffs on goods coming into the U.S., including a universal 10% tariff on most imports, 25% tariffs on steel and aluminum, and hefty tariffs on goods from China, among others. However, these tariffs have so far targetted physical goods, not services or intellectual property. If the proposed 100% tariff on foreign movies goes into effect, it would be the first time that the U.S. has applied tariffs to services like the film industry.
