U.S. President Donald Trump on May 4 announced a 100% tariff on movies produced outside the country, saying the American movie industry was dying a 'very fast death' due to the incentives that other countries were offering to lure filmmakers.
Reuters
American media stocks tumbled on Monday after President Donald Trump unveiled a 100-per-cent tariff on all movies produced outside the U.S., in his latest levies that could sharply raise costs for Hollywood studios and roil the global entertainment industry.
Mr. Trump’s announcement was light on details. It did not say whether the duties will target films on streaming platforms and those shown in theatres, nor did it specify if the tariffs will be calculated based on production costs or box-office revenue.
Streaming pioneer Netflix Inc. NFLX-Q could particularly be at risk, as it relies on its global production network to produce content for international audiences. Its shares slumped 4.9 per cent in premarket trading, leading a slide in media stocks.
Walt Disney Co. DIS-N, Warner Bros Discovery Inc. WBD-Q and Universal-owner Comcast Corp. CCZ-N were down between 0.8 per cent and 2.7 per cent. Stocks of theatre operators such as Cinemark Holdings Inc. and IMAX Corp. fell 3.5 per cent and 5.9 per cent, respectively. AMC Entertainment Holdings Inc. slipped 0.4 per cent.
Despite Los Angeles’s historic reputation as the hub of cinema, studios have over the years shifted production overseas to locations such as the U.K., Canada and Australia to take advantage of generous tax credits and lower labour costs.
Most of this year’s Oscar best-picture nominees were shot outside the U.S. and a survey among studio executives over their preferred production locations for 2025 to 2026 by ProdPro showed that the top five choices were all overseas.
A forced move back to the U.S. would likely drive up production budgets and disrupt a global supply chain that now includes shooting in Europe, post-production in Canada and visual effects work in Southeast Asia.
“The problem is that pretty much all the studios are moving tons of production overseas to reduce production costs,” said Rosenblatt Securities analyst Barton Crockett.
“Raising the cost to produce movies could lead studios to make less content. There’s also a risk of retaliatory tariffs against American content overseas.”
Films are a huge U.S. export. American movies generated US$22.6-billion in exports and a trade surplus of US$15.3-billion in 2023, according to data from trade body Motion Picture Association.
Any higher costs or levies will add pressure on an industry grappling with cord-cutting by subscribers leaving cable TV for streaming.
The industry is already in the crosshairs of China, which last month vowed to curb imports of Hollywood movies after Mr. Trump’s aggressive tariffs. But analysts said the financial fallout of that move may be limited, as box-office revenues from China have waned in recent years.
Mr. Trump’s latest decision undermines hopes that he was starting to back away from the heavy tariffs on imported goods imposed in recent months that have shaken confidence among consumers and businesses and sapped economic growth.
The White House has been forced to backtrack on levies as investors started to doubt the safety of U.S. assets – but Mr. Trump has often paired his retreat in one area with additional threats elsewhere.
The global film industry responded to his latest threats – which Mr. Trump claimed were meant to address national security concern – with a mix of shock and concern.
Leaders in Australia and New Zealand said they would advocate for their local industries. Some Marvel superhero movies have been filmed in Australia, while New Zealand was the backdrop for The Lord of the Rings films.
British media and entertainment union Bectu called on the government to move swiftly to protect the country’s “vital” film industry, warning the tariffs would threaten tens of thousands jobs of freelancers who make films in the U.K.
Matthew Stillman, chief executive officer of Prague-based Stillking Films, one of the biggest producers of U.S.-financed international content in Central and Eastern Europe, said the tariff threat risked derailing global production pipelines.
“We are awaiting clarity about how the tariff is calculated and whether it’s on international rebated production, film financing or U.S. distribution – all of which have implications and complications,” he said.