In a recent post on Truth Social, Donald Trump announced plans to implement a 100% tariff on films produced outside the United States. He declared that the American movie industry is rapidly declining, as other countries entice filmmakers away from Hollywood with various incentives. Trump expressed his intent for the Department of Commerce and the U.S. Trade Representative to initiate this significant tariff, emphasising a desire to revitalise domestic film production.
Trump stated, “We want movies made in America, again!” However, the practicalities of enforcing such a tariff remain uncertain. Films are classified as intellectual property rather than physical goods, which complicates the standard implementation of tariffs, typically applied to commodities. Although intellectual property can be affected by non-tariff barriers, such as tax regulations, the suggestion of a film tariff raises questions about its feasibility.
As international locations increasingly lure productions with substantial tax breaks, many filmmakers have shifted projects to cities like Toronto and Dublin. In response to this trend, California Governor Gavin Newsom has proposed extensive tax credits to draw production back to the state.
Trump described the departure of Hollywood as a national security concern driven by foreign competition, branding it as a threat that includes “messaging and propaganda.” He noted that Hollywood’s challenges are part of a systemic effort by other nations.
While box office numbers have fluctuated post-pandemic, the overall health of Hollywood is not as dire as Trump suggested. The industry has seen a decline in ticket sales and the number of major movie releases, with many viewers opting for streaming services instead. After peaking at just under $12 billion in box office revenue in 2018, the figure plummeted to approximately $2 billion in 2020 due to pandemic lockdowns, and though theatres have slowly rebounded, the current revenue has not reached pre-pandemic heights.
Despite the industry’s struggles, many American films continue to be produced internationally. Costs are often lower due to cheaper production crews and tax incentives offered abroad, which can make foreign filming financially appealing.
Trump’s proposed film tariffs could potentially create the first tariffs on services, diverging from traditional trade measures, which have typically targeted goods. In the past, he has imposed tariffs on various imports, but none have encompassed services like film production.
As the situation evolves, the impact of such tariffs on the film industry and the potential for retaliatory trade measures from other nations remains to be seen.