How Would Foreign-Movie Tariffs Even Work?

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On Sunday evening, there was widespread concern in Hollywood as President Donald Trump announced his intention to empower the U.S. Trade Representative and the Commerce Department to start enforcing a 100% tax on films imported from foreign countries.

Trump has labeled the growing trend of film productions shifting from California to countries like the U.K., Australia, Canada, Hungary, and Romania, due to attractive tax incentives, as a “National Security Threat.” In a statement, he wrote, “The American film industry is rapidly declining. Foreign countries are enticing our filmmakers and studios away from the U.S. with various benefits. Many parts of the U.S., including Hollywood, are being severely impacted…Consequently, I am instructing the Department of Commerce and the United States Trade Representative to promptly initiate the procedure for imposing a 100% Tariff on any films produced overseas that are brought into our country. We want movies made in America once more!

Outside Air Force Two on Sunday, reporters questioned the president about the situation in California, to which he responded by partially placing blame on Governor Gavin Newsom. He stated, “The entertainment industry in Hollywood is suffering. This is due to a poorly performing governor who permitted this to occur. Therefore, I’m not solely blaming foreign countries, but many of them have indeed taken our movie industry. If they refuse to create films within the United States, we should impose a tariff on imported movies. Moreover, governments are providing substantial financial aid to these industries, which can be considered a potential danger to our country.

Trump added of the planned tariffs: “It’s been a very popular thing. Moviemakers love it.”

Within Hollywood’s Thirty-Mile Zone, the response was primarily dismay, tinged with criticism. Studio leaders, agents, and producers grumbled that the proposed tariff plan was poorly thought out, lacking in specifics, and simply bad for business. The announcement came at a time when the Cannes Film Festival is typically bustling with acquisitions, prompting studio heads to quickly convene crisis meetings to discuss the tariffs and consider possible strategies. Independent producers and sales agents worried about what they view as an imminent threat to their industry. Meanwhile, Newsom’s administration, which has been working to double California’s television and movie tax incentives to $750 million annually, expressed doubt over Trump’s legal right to implement such measures. A senior adviser told Deadline, “We believe he has no authority to impose tariffs under the International Economic Emergency Powers Act since tariffs are not listed as a remedy under that law.

Let’s refer to it as a solution for excessive overseas production – essentially, movies and TV shows produced abroad for U.S. distribution. This term is not popular in Hollywood. The immediate, widespread concern suggests that Trump’s tariff authorization raises more questions than it answers about potential solutions. Among these questions:

How would this even work?

It’s not accurate to label all films produced outside of the U.S. as runaway productions. Executive-level studio executives will agree that imposing import taxes on movies is impractical due to the international nature of contemporary filmmaking. For instance, this summer’s “Mission: Impossible — The Final Reckoning” was made by Paramount Studios, an American company, but it featured American crews and stars like Tom Cruise. However, the movie’s plot revolves around international intrigue and was filmed in various locations worldwide, including the U.K., Norway, South Africa, and Malta. If a production like this is taxed for not filming solely within the U.S., it could have severe consequences for global franchises such as James Bond and The Fast and the Furious series, since there are no clear standards on what incurs taxes and how.

To clarify, when a studio like Universal produces a film, for example, Christopher Nolan’s version of The Odyssey, in locations such as Morocco, Greece, and Sicily, it doesn’t mean the movie is “imported” because its planning and funding were primarily handled in the U.S. The situation becomes more complex when you consider that a significant amount of visual effects (VFX) and post-production for major Hollywood productions often takes place in countries like Canada, New Zealand, and the UK. Determining exactly what and how much was produced in “Foreign Countries” would not be an exact science.

Who would be impacted most?

Producing movies domestically, specifically in the U.S., may increase costs by up to 40% compared to productions in Europe and Australia, mainly due to fewer tax incentives. Moreover, labor costs for below-the-line crews in America are typically higher because of heavy unionization under the International Alliance of Theatrical Stage Employees (IATSE), a primarily American organization.

A tariff could result in the elimination of many low-budget movies, such as last year’s Oscar winners like “The Brutalist” (primarily filmed in Hungary) and “A Real Pain” (filmed in Poland). This is because the tariffs make it extremely difficult for independent studios to produce these films. An executive at an independent studio stated this morning, “The tariffs essentially kill indie film. This will decrease spending at Cannes. Whenever there’s an international co-production, forget about American distribution due to these excessive taxes. It’s a mess.

Is Trump really doing this?

A fundamental aspect of the debate surrounding the president’s implementation of tariffs is that he has merely given them his approval thus far. He hasn’t initiated any actions yet. Following Trump’s announcement on Truth Social, media stocks have significantly dropped, but as of now, neither the U.S. Trade Representative nor the Commerce Department has declared any concrete measures to impose penalties on films made with foreign components. Furthermore, White House spokesman Kush Desai confirmed on Monday that “no definitive decisions concerning tariffs on foreign-filmed movies have been reached.

Over the past few months, the President has implemented a 25% tariff on all goods imported from Colombia, only to later rescind it when Colombia agreed to the President’s demands. Additionally, he announced plans for unspecified tariffs on foreign-made cars; however, the implementation date was moved from April 1 to April 2 due to the President being a bit superstitious about April Fool’s Day. This constant imposition and withdrawal of tariffs has caused market turmoil and left trading partners confused, as it seems to be more about political gains and economic pressure than promoting stability. The U.S. Secretary of Commerce, Howard Lutnick, tweeted that they were prepared for the tariff announcement, but whether the foreign-movie tariffs will actually take effect remains uncertain.

Is he going to impose tariffs on television too?

During the Peak TV period, there’s been a concerning trend of television series production moving away from the U.S. One example is the trivia-game show “The Floor,” hosted by Rob Lowe, which films in Ireland due to its tax incentives worth up to 32%. A report from ProdPro reveals that American TV and film production (with budgets exceeding $40 million) has decreased by 26% compared to two years ago. However, President Trump hasn’t suggested any tariffs on offshore television production yet.

In January, Trump designated Sylvester Stallone, Jon Voight, and Mel Gibson as “specialized representatives” in Hollywood, suggesting that these actors would help reverse the industry’s trend of moving production. More recently, it’s been reported that Voight has been meeting with studio leaders and union reps like the Directors Guild of America, IATSE, and the Teamsters to discuss a potential plan for revitalizing show business. “These three gifted individuals will serve as my informants,” Trump stated, “and I’ll implement their ideas.

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2025-05-06 01:54