In late September, President Donald Trump announced a 100% tariff aimed directly at movies made outside of the United States. He claimed the “movie making business is being stolen from the United States of America, by other countries.” His solution to this issue was to implement a tariff, a move that hasn’t been uncommon during his administration. While it’s a vague and simple statement with no formal plan, it could still pose a large threat to the movie industry.
Tariffs are a tax that a government imposes on imported goods and services. This makes the foreign products more expensive and generally encourages customers to shop locally. But for the implementation towards movies, it’s hard to pinpoint exactly where the tax will be attributed to: will it be the budget, the ticket price, or some other economically based good within the industry?
President Trump specifically points the tariff towards movies that are made outside of the United States. However, movie making is a complex international process. Many movies must go outside of the United States in order to film at a specific location, including even recent “American” movies like Barbie and Oppenheimer. Production companies have different divisions that are often located across many countries, all working together on a singular project, which would make it difficult to enforce the tariffs.
Tax incentives have been in place for the movie industry for a long time. Used as a way to encourage filming in specific areas, many states have tax incentives which are refundable and supplement a percentage of the costs for making the film. However, with the cost of filming in big American cities going up, foreign countries have also implemented tax incentives that have lured filmmakers away from the United States. The tariff threat could potentially be used to pull filmmakers back to the U.S. in order to avoid the higher costs that are associated with it.
This news comes during an already volatile time in the movie industry. Movie theaters are still declining since the COVID pandemic, struggling to bring in the audiences they used to. The box office has also been struggling, currently down 11% from last year. Movie star Leonardo DiCaprio’s newest film, One Battle After Another, recently released with a budget of $130 million, but is just barely breaking even without accounting for additional costs that came with making the film. High budgets require high returns in order to come close to breaking even, but with the film industry faltering, we see many films flop and operate at a complete loss. Streaming doesn’t help this problem, either. Many people already turn to streaming services in order to watch films, oftentimes skipping out on the theatrical release altogether and opting to wait for them to appear on streaming. While viewership of the movie may be up, this only brings money to the film industry through licensing and not directly towards the box office or revenue of the film. The movie industry is uneasy enough in its currently state, and the threat of tariffs compounds that problem.
President Trump’s proposed tariff towards movies is a complicated move lacking a formal plan and has caused much confusion towards what it would specifically apply to. While the action is meant to help the country and encourage domestic production of films in America, it may ultimately harm an already struggling movie industry.
