President Donald Trump’s Sunday night’s proposal to impose tariffs on films made outside the US is filled with a mix of confusion and fear from the entertainment industry.
And by noon Monday, White House officials revealed that “there are no final decisions” and “exploring all options.”
Trump’s first proposal, posted to Truth Social, called for tariffs on “all films that come to our country that are produced on foreign lands,” and said what he said was a detrimental effect of the incentives offered by other countries.
“We want a film made in America again,” Trump wrote.
Speaking from the oval office just before 2pm on Monday, Trump said he would meet with industry officials to confirm that they are “happy” with his tariff plans.
“I’m not trying to hurt the industry. I want to help,” he said.
Industry staff and observers did not respond well to the initial plan. In a note to clients, analysts at Morgan Stanley call the idea “unclear,” pointing to a 100% obligation for some or all of Hollywood’s production “which leads to a reduction in the revenues of less films, more expensive films, and all business revenues.”
“The reality is that certain films have writing, production, editing, post-production, visual effects. They all take place in different countries,” they write.
Analysts noted that Trump’s proposal did not mention whether tariffs also apply to television productions, which aspects of production will receive tariffs, how they will be charged, and whether tariffs can be applied retrospectively.
As Hollywood continues to navigate one of the most difficult periods in history, changes in audience taste and habits, the dawn of artificial intelligence, and radioactive fallout from writers’ strikes rattle the industry and dominate box office returns. Last year, the box office revenue was just $8.75 billion, down 3% from 2023, bringing a larger pre-pandemic average of $11 billion.
It is true that Hollywood has increasingly chosen to adopt production overseas, seeing some of the biggest jumps in spending and investment in Canada, New Zealand, and in particular the UK. Last year’s biggest live-action hits, Deadpool & Wolverine, Wicked and Dune: Part 2, were filmed in studios outside the US
However, unlike most sectors where Trump targets tariffs, the US entertainment industry has a large trade surplus with other parts of the world given its continued foreign interest in American titles.
Several Hollywood representatives either declined to talk about Trump’s proposal or did not respond to requests for comment.
Hollywood Sign in Los Angeles on September 25th, 2023
Meanwhile, the financial impact was already felt. Trading on Monday saw stocks of most entertainment giants, including Netflix, Paramount and Warner Bros. Discovery.
The proposal also comes when Trump appointed Mel Gibson, Sylvester Stallone and John Voight as “special ambassadors” and reclaimed “lost business.” In particular, all three men support Trump and support conservative trends.
White House officials initially introduced the Department of Commerce with additional questions regarding the proposed tariffs. In an X post, Commerce Secretary Howard Lutnick said “We’re following it” on an account that reposted Trump’s true social post.
Other analysts are more cheerful about the ability of content entities to avoid tariffs. Analysts at Wedbush said that tariffs can be “avoided or minimized” as long as there are elements of production made in the US without first-hand knowledge of the White House vision.
They added that the studio is likely to move some production factors into the state to appease Trump, but this will be digged into their profit margins.
More effectively, Wedbush analysts say they think the entire tariff episode could end up sinking.
“In the long run, I hope that foreign reactions and congressional claims of constitutional authority will change Trump’s mind,” they wrote.
The president called the foreign-provisioned tax incentives offered as “national security threats” in his post on true society.
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