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(WASHINGTON) — President Donald Trump late Sunday proposed a 100% tariff on foreign-made films, saying the policy would counteract financial incentives that have drawn Hollywood productions overseas.
“WE WANT MOVIES MADE IN AMERICA, AGAIN!” Trump said in a post on social media.
Movie studios have increasingly moved production abroad in recent years as a means of cutting costs, industry analysts told ABC News, but it remains unclear how adding a tariff would succeed in boosting domestic production.
Instead, it could send costs soaring, the analysts said. It could also reduce the number of Hollywood films produced each year and potentially increase ticket prices, they explained.
“Essentially what Trump is trying to do is make it untenable for U.S. movie studios to produce movies abroad — and the whole idea is that will stimulate production in the U.S.,” said S. Mark Young, an accounting professor at the University of Southern California’s Marshall School of Business who studies the movie industry.
“But it would cost more money for film production in the U.S.,” Young added. “Where’s that going to come from?”
Here’s what Trump’s proposed tariff on foreign-made films could mean for Hollywood and moviegoers:
Why are U.S. studios filming some movies overseas?
The rise of streaming services over the past decade fostered a surge in demand for scripted television and movies, as well as a spike in spending among studios, London-based consulting firm Olsberg SPI found last year.
In 2022, 599 scripted series aired in the U.S., registering more than double the 288 scripted series aired in 2012, Olsberg SPI said, noting that growth ebbed in the aftermath of the COVID-19 pandemic but the overall production rate still surpasses what it was a decade ago.
Alongside that growth, the provision of production incentives worldwide surged nearly 40% over the past seven years, Olsberg SPI said, as nations vied for about $250 billion in global content spending.
But the incentives drawing production away from Hollywood aren’t all originating overseas; a slew of states have also boosted financial incentives to compete with moviemaking mainstays California and New York.
Financial incentives abroad have caused some productions to shift overseas, but they’re hardly the only reason, Jennifer Porst, a professor of film and media at Emory University told ABC News.
COVID-19 lockdowns sent studios seeking alternative locations, as did widespread labor strikes in 2023 and the increasingly global audience with streaming subscriptions, Porst said.
“There are a whole range of reasons for why production comes and goes,” Porst added. “Part of that is due to financial incentives.”
What is Trump’s proposed tariff on foreign-made films?
In a social media post on Sunday, Trump sharply criticized the production of Hollywood films overseas, claiming the trend had “devastated” parts of the U.S.
Trump claimed without evidence that the use of financial incentives abroad amounted to a “national security threat,” saying that — in his view — such productions involve “messaging and propaganda.”
Trump ordered the United States Trade Representative to begin the process of implementing a 100% tariff on foreign-made films.
In a statement on Monday, the White House said the policy hadn’t been finalized.
“Although no final decisions on foreign film tariffs have been made, the Administration is exploring all options to deliver on President Trump’s directive to safeguard our country’s national and economic security while Making Hollywood Great Again,” White House deputy press secretary Kush Desai told ABC News.
The proposal of a tariff on an intangible product like films poses a challenge for policymakers, since the U.S. cannot impose a direct tax on a film as it would a durable good, Tejaswini Ganti, a professor of anthropology at New York University who studies global film, told ABC News.
“If it’s a tax on people going abroad to shoot, what is the tax on? Is it going to be, ‘Here’s the final budget and we’ll add a tax on it’?” Ganti said. “What is the thing being taxed?”
Ganti also questioned the notion of a national security risk posed by Hollywood productions made abroad.
“If a Hollywood film is shot, say, in the United Kingdom, I don’t understand how that is a national security threat,” Ganti said. “It’s still an American story, just shot somewhere else.”
What could Trump’s proposed tariffs mean for Hollywood and moviegoers?
It remains unclear whether Trump’s tariff proposal would bolster domestic movie production, analysts said. Instead, the policy may force movie studios to choose between the tax burden associated with foreign-made films or the elevated cost of U.S. production, resulting in more expensive projects, fewer overall films and even less domestic output, they said.
“President Trump figured out the fastest way to dramatically reduce the number of films produced each year in America,” Rich Greenfield, a media and technology analyst at LightShed Partners, said in a post on X.
Greenfield followed with multiple rocket ship emojis to indicate the anticipated rise in costs if the tariff plan moved forward.
“It would be a disaster,” Young said, noting the likely added cost burden of a potential 100% tariff. “You can’t wave a magic wand and expect more money to appear.”
In an effort to weather added costs, the film industry may become more reliant on big-budget franchise films, leaving less opportunity for midsize or small-budget movies, Young added.
The extra tax burden could even hit the pockets of U.S. moviegoers, Ganti said.
“Could it lead to higher ticket prices? Sure,” Ganti added.
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