President Donald Trump on Sunday extended his trade war to the cinema.
Trump, in an evening post on his social media platform Truth Social, said he has instructed the Commerce Department and US Trade Representative to place a 100% tariff on films that are produced outside the United States and imported into America.
“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,” Trump wrote in his post. “Therefore, 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!”
It’s not at all clear how such a tariff would be imposed. Films are intellectual property, not goods, so they represent a kind of service that is not currently subject to tariffs. However, the USTR notes that some services can be subject to certain non-tariff trade barriers, such as regulations and tax incentives. Those could disadvantage American filmmaking.
Many foreign cities have offered large tax breaks to film and televisions studios to shoot movies and shows outside of Hollywood. That has led to a large number of productions to shift operations to places like Toronto and Dublin. In response, California Governor Gavin Newsom has proposed a massive tax credit to bring back production to Hollywood.
“Hollywood, and many other areas within the U.S.A., are being devastated,” Trump wrote. “This is a concerted effort by other Nations and, therefore, a National Security threat. It is, in addition to everything else, messaging and propaganda!”
Although Hollywood is far from devastated, movie tickets are down in the United States as the number of major pictures hitting theaters has tumbled since the pandemic — and consumers have shifted their viewing habits to streaming platforms to watch at home.
US box office gross topped out at just under $12 billion in 2018 before nosediving to just over $2 billion in 2020, when many theaters were shut down because of Covid. Although theaters have rebounded, the number of releases is about half of what it was in 2019, and the total domestic box office gross hasn’t eclipsed $9 billion since.
Streaming networks are largely owned by the big Hollywood studios but — aside from Netflix — have taken years to turn a profit. Disney+ just turned its first profit, as did Max, which shares ownership with CNN. Many other streamers have yet to make money.
But placing tariffs or other trade barriers on foreign-made products may not make business any easier for Hollywood studios. Many American movies and shows are shot on location outside the United States. In addition to tax breaks, many foreign staff demand cheaper pay, making some movies more economically viable to produce.
Trump has lambasted non-tariff trade barriers that other countries place on the United States, but he has so far limited America’s retaliation to traditional tariffs on goods. Trump has imposed a universal 10% tariff on most goods coming into the United States and put in place — then delayed — even more substantial “reciprocal” tariffs on dozens of other nations. He has also placed 25% tariffs on steel, aluminum, autos, auto parts and some goods from Canada and Mexico. And he put a massive 145% tariff on imports from Canada.
But none of those tariffs are on services. The tariffs on film production — if they come to pass — could be the first.
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