Trump’s Outrageous Movie Tariff: What It Means for Hollywood’s Future!

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As a seasoned movie critic, I’ve witnessed an unprecedented rollercoaster ride in Tinseltown over the past few years. A global pandemic that brought productions and cinemas to a halt, a historic dual strike by the writers and actors unions, and catastrophic fires ravaging parts of Los Angeles. Now, it seems Hollywood is bracing for another wave of precarious uncertainty: on Sunday, via his Truth Social account, former President Donald Trump announced plans for a 100% tariff on movies produced outside the United States. This could potentially reshape the global film landscape as we know it.

Trump failed to provide clear insights on how this proposed tariff mechanism would function, leaving me puzzled about its practicality. Unlike movies, imports that typically attract tariffs arrive in predetermined quantities and at fixed prices, making them subject to taxation. The questions that arise are: When exactly will the tariff be imposed, and who will bear the financial burden? Is it going to be an all-inclusive 100% of the budget, or perhaps the ticket price? One can’t help but wonder if any part of this concept is feasible at all.

In the news about this recent declaration, everyone appeared to be posing similar questions. To shed some light on the matter, I contacted an economist for insights. Mark Blyth is a political economist and scholar, serving as the William R. Rhodes Professor of International Economics and Professor of International and Public Affairs at Brown University. He has previously discussed tariffs and written about Trumpism, and he co-authored a new book titled “Inflation: A Guide for Users and Losers” that will be published this month. Given his expertise on tariff matters, I believed he could offer valuable clarification regarding the potential nature of this new tariff.

What Would A Tariff On Movies Look Like?

“Films Aren’t Really Goods That You Consume”

It appears that imposing a tariff on foreign-made films can be hard to grasp, as Blyth puts it, it’s “completely irrational.

It seems challenging for me to wrap my head around the concept of taxing a movie, if that’s what you mean.

Mark Blyth: It’s utterly absurd, don’t you agree? I mean, it’s completely irrational, correct? So, are we talking about a cinema ticket here? The price would be $20 for the movie theater, but $40 for the same movie? That scenario is never going to materialize.

So, are you suggesting that if such an approach is implemented, regardless of how it’s done, the cost would be passed on to the ticket price, making this the key distinction?

MB: In essence, this could be one approach, but let me emphasize, it’s quite extreme. This escalates the trade war to unprecedented heights. You see, films aren’t typical commodities that you purchase like a car from Germany and then impose tariffs on. That’s because movies aren’t tangible goods subject to such measures, isn’t it?

Essentially, it’s a temporary right to use something akin to an intangible asset, which you acquire by purchasing a ticket, allowing access for a specific duration – typically two hours. Now, the question arises: How do we price this service or time-bound privilege?

What exactly is being taxed? Is it because the production took place on-location? For example, consider a film like Interstellar, where a significant portion was filmed on an Icelandic glacier. It wouldn’t be feasible to recreate that scene in Southern California, correct? So, do productions simply avoid such locations now? Is it any film shot on location that gets affected?

From a film enthusiast’s perspective, I ponder over the origin of the funding since it could stem from various parts of the world, such as Asia in this case. The production then takes place at Pinewood Studios in London. Later, this creation, born and raised on diverse soil, gets distributed worldwide under an American banner. To be honest, I find it quite challenging to envision how such a global film industry exchange could potentially be subjected to tariffs. Frankly, I believe many others share my confusion about this matter.

[…]

I’m truly at a loss as to how one might accomplish this task. Let’s say for instance that you’ve produced a movie and now aim to distribute it in the United States. The critical step for importation would be when the film is digitally uploaded to servers and cinemas, after which it is screened. Apart from that, what options are there? You could scrutinize the company, or impose heavier taxes on them, but that’s more akin to taxation rather than a tariff since it’s not directly tied to the goods, but to the corporation itself. Frankly, I’m stumped as to how this could be achieved.

If you manufacture your iPhone in China instead of India and import it, then it’s reasonable to categorize the items as Chinese goods, which tend to cost around 100 dollars more. However, consider a film where the financing originates from Asia, the actors hail from the United States, and it’s filmed in the UK and Iceland. This production can be classified as global products, implying collaboration across various regions. As for when tariffs should be imposed, it’s tricky. One possible solution could be at the point of consumption, such as in a movie theater. However, this concept seems quite unusual…

After that, what’s the next step with streamers? What do we do with streamers after that? Is there some kind of extra charge involved, like a customs duty or something, because it seems strange to compare this to a car or a bottle of French wine. You can drink California wine or you can drink expensive French wine that has a tax on it. You can watch an American film or a foreign one… I just find it hard to wrap my mind around that idea.

It turns out I’m not alone in my thinking – imposing a tax on movies seems rather illogical. I brought up films such as “Mission: Impossible – The Final Reckoning,” which was filmed globally for narrative purposes, since this is an integral aspect of the franchise. Blyth acknowledged the challenge of determining what counts as a film produced abroad and noted that similar issues arise when considering tariffs beyond just movies.

For a product to be considered domestic, it must be produced, filmed, staffed, and financed within the United States, correct? However, even with typical startups, things can get complex because this concept is based on the idea that Germans manufacture cars, Americans make cars, we impose tariffs on German cars, leading to increased sales of our own cars. Most trade in manufacturing, as economists explain, involves intermediate goods – components used in other products that are made by different people and cross borders multiple times.

Once you consider tariffs from this angle, it becomes apparent why people are concerned about the potential rise in prices. Here, I’m referring to tariffs imposed on intellectual properties, or inventions – a concept that seems quite distinct from traditional tariffs. This appears to have been an impulsive decision, made without much deliberation, perhaps after a late-night conversation with Mel Gibson.

Could Trump’s Plan Still Encourage Hollywood Productions To Remain Stateside?

“What Would My Incentive Be?”

Even though a tariff on foreign movies might not be entirely economically sound, the fact remains that Hollywood productions are increasingly being filmed abroad instead of in Los Angeles. Other countries and even other states offer attractive tax incentives, making it hard for LA to compete. I initially thought I had the solution, but I couldn’t help but wonder if President Trump’s proposed idea could indeed result in more film shoots staying within the U.S. borders?

MB: I don’t quite grasp the reasoning behind it. What’s in it for me? Well, one possibility is that I could take advantage of a tax break by doing so, or alternatively, there might be other ways I would be taxed to make it more costly for me. To put it simply, if I decide to use green screen technology, given that I have the ability and space to do so, and assuming you can see the rationale for this approach, then it’s likely I’ll still be here producing content, correct?

As a devoted cinephile, let me share my thoughts: If we consider a masterpiece like Game of Thrones, where on earth did they film the entire series? They transformed Northern Ireland into their grand set for six years! With such an extensive production capacity, a skilled crew, and experts at your fingertips, it’s all readily available – it’s just a tap away. So, would you give up this well-oiled machine and then attempt to reconstruct the entire production in a new, costlier environment solely due to tariffs? I highly doubt it!

Blyth stressed that crew and expertise are more crucial to the debate on a possible tariff than one might initially think. He pointed out that when it comes to the Trump administration imposing tariffs, what’s frequently overlooked is the focus on the knowledge needed for US industry to effectively take over these roles. While tariffs may discourage consumers from purchasing foreign goods, the question remains: if there aren’t skilled workers available, will manufacturing jobs truly return to the U.S.?

Another aspect of the issue is that Christopher Nolan’s set designer, who I had a conversation with some time ago, noted that many productions are being made in London not just for tax incentives and lower costs, but also because of the unique skills available there. These skills – such as carpenters, electricians, etc. – were let go by Hollywood studios about 20 years ago without being replaced. As a result, it’s difficult to find people with the necessary expertise to carry out such work.

In essence, the situation here is similar to Trump’s desire for tariffs on goods. Just as we stopped manufacturing items about two decades ago, losing the ability to create them ourselves, we now find ourselves unable to produce films in Hollywood. To compensate, we impose tariffs to make it economically viable again, but that’s just the beginning. We need to educate and train a new generation of professionals – from set designers to production engineers – to recapture the skills necessary for creating the tangible world on screen. Unfortunately, we’ve neglected this for two decades, which is why our film industry has moved to other countries like England.

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If you find yourself in a situation where another tax break is your competition, it would be logical to counter with a similar tax advantage of your own. In the context of negotiating with multiple countries, you could argue, ‘Let’s stop offering tax incentives since we are essentially undercutting each other’s industries.’ Tariffs can serve as an initial measure, but remember that they are merely the first step. To truly be effective, you need to develop the ability to carry out those measures, and this necessitates activities such as educating and hiring set designers and other necessary professionals—skills and resources that may not currently exist in your region. So, in essence, what I’m saying is that this policy proposal might not be fully operational yet.

It would be more advantageous to have a fair competition environment regarding taxes, or acknowledge that it’s not solely about taxes. Just as Nolan’s set designer explained to me, it’s all about the team. For instance, when he travels to India to shoot something, he employs locals but also brings Brits and Icelanders with him. Why? Because they can handle harsh conditions, which allows them to adapt to the unexpected. Why? Because they have been making films in challenging locations for two decades. In other words, if you don’t have the right people on your team, you can’t make the film.

And that goes way beyond tax incentives or tariffs.

After chatting with Blyth, it’s evident that imposing a tax on films isn’t the solution for Hollywood’s production challenges. Although Governor Gavin Newsom’s proposal to significantly increase film subsidies in California could potentially bring about improvements, relying solely on financial incentives isn’t enough. If Hollywood aspires to see more movies filmed within its boundaries, it’s essential that the industry reinvest in the expertise and know-how of filmmaking that once made the US a cinematic powerhouse. Regrettably, studios have grown too accustomed to seeking this knowledge elsewhere.

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2025-05-05 22:39