Much like every other industry over the past 100 days, an announcement of tariffs has been laid down randomly on social media. Despite uncertainty in the marketplace, a job market that is starting to cool off, a tumultuous future outlook for the U.S. federal reserve, more isolationism with U.S. allies, and an approach that arbitrarily starts and stops the trade policy seemingly causing more uncertainty in each market, current leadership in the Oval Office continues to announce plans for tariffs on any and all goods that come to their minds. While the intent of this article is not to take a partisan political stance, the politics will inherently shine through due to the subject matter and the fact that they are policies potentially being implemented by a political leader. Unfortunately, the social media post did not explore the plan, merely its concepts of one, which has left a lot of curiosity as to a handful of things regarding a potential tariff of a movie. Is it possible? Is it legal? If these two scenarios do end up on the ‘yes’ side of the coin toss, what does it mean?
The first thing to look at is the post itself. On Sunday night, The Apprentice star Donald Trump took to his own social media platform, Truth Social and shared that “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,” the 45th and 47th President of the United States continues. “Hollywood, and many other areas within the U.S.A, are being devastated. This is a concerted effort by other Nations and, therefore, a National Security threat. It is, in addition to everything else, messaging and propaganda! 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!”
The President brings up an interesting observation somewhere within the seemingly tangential words. Since the SAG-AFTRA strike ended in November of 2024, there has been a 40% increase in productions filmed outside of Hollywood. It’s necessary to note that this isn’t the number of films shot internationally, rather just films shot outside of traditional Hollywood. The state of Georgia, for example, was recently ranked #1 in Film Production for 2024 via multiple outlets, while there has been ample increase in states such as Louisiana, New Mexico, and Colorado. While the decreases in New York and California seem alarming, the number isn’t quite a 40% domestic drop. However, that doesn’t mean there hasn’t been a significant dip. While the numbers vary by production needs, there has been a stunning increase in production across Europe, Australia, Canada, and New Zealand in recent years for live-action pictures and Japan for animated features, though that began before the strike due to government rebates and tax breaks incentivizing using their property. It’s also worth noting that certain films, notably blockbusters such as the Dune films, are almost impossible to shoot in the United States without being entirely CGI due to lack of terrain and resources.
That being said, the industries are struggling for below-the-line workers as these productions move overseas. The larger the percentage that doesn’t seem to be slowing down becomes, the bigger problem the workers based domestically face. Representative for California’s 37th District Sydney Kamlager-Dove has been an outspoken proponent for ‘Stay in LA’ legislation at a federal level, while recently attending a rally to attempt to pressure state government to pass the legislation alongside prominent industry figures such as Point Break star Keanu Reeves and Knives Out director Rian Johnson. Governor of California Gavin Newsom as recently as quarter four of 2024 has introduced legislation to expand California’s tax credit toward film production to $750M annually, more than a $400M increase. This legislation would expect 40,000 new jobs this year while films that previously were set international shoots such as Behemoth! starring Oscar Isaac and an untitled film from Everything Everywhere All At Once directors the Daniels brothers come back stateside. This legislation would subsidize 35% of a budget filmed in L.A., 40% for any area in the state of California outside of the L.A. metropolitan area. While increasing the state budget isn’t ideal, California’s GDP is an approximated $4T, higher than that of all but three countries. A decrease in Hollywood production beyond what’s currently happening would massively impact California’s economy, seeing as its massive tourism industry is shouldered by the fascination that Hollywood brings to the table. Not to mention, a vast majority of L.A. locals aren’t millionaire actors as much as hundreds of thousands of workers that drive local spending within the United States of America, and money out of the pocket of L.A. locals that are already living thinly paycheck-to-paycheck could make their already-egregious homeless population far more crowded. While their economy itself would still be perhaps the strongest in the Union thanks to its innovation in Silicon Valley on the technology front, trade powerhouse status due to its resources and terrain on the U.S. coastline, and a hub that leads all fifty states in both manufacturing and Fortune 500 companies, a decrease in California tourism and jobs due to Hollywood going overseas is detrimental to U.S. economy and U.S. strength as a whole. The idea that anything made overseas as implied is ‘propaganda,’ or a ‘threat to national security’ is likely to be off-base, however, that’s a different conversation to be had elsewhere as it is above TWM+’s pay grade, especially as being an outlet based in the United Kingdom is probably a conflict of interest for TWM+ to explore. The U.S. President is perhaps spot on in his goal to bring production back to the USA, however, his answer doesn’t seem to be a solution, and his answer also likely isn’t viable from a physical or a legal standpoint.
The idea of a movie tariff reportedly comes from the mind of Deliverance star Jon Voight, as Trump’s cabinet includes Voight, First Blood and Rocky star Sylvester Stallone, and Braveheart star Mel Gibson as Special Ambassadors to Hollywood, a Cabinet position that didn’t seem to exist until about four months ago. The idea is put forth that the U.S. features a trade deficit in film, and that scaling back on the deficit would be both good for workers but also good for the U.S., as is such reasoning publicly delivered for each of the Trump tariffs put in place. Unfortunately, the data does not match that deficit, as American films, per the MPA, had a $15.3B surplus value in 2023, and while data from 2024 is currently unavailable, the most recent data shows that the U.S. films made the most money in every major market in the world as recently as two years ago. This, theoretically, does assume that there’s no shift in numbers year-over-year, but historically that’s never been the case, and considering that only two foreign films ranked inside the worldwide top 50 box office of 2024, is almost assuredly not the case.
The biggest problems that the movie tariffs bring to the table aren’t the tariffs themselves, though they don’t seem to potentially solve anything. If the reasoning for the tariffs is that Hollywood is outsourcing a majority of their jobs, so charging 100% more, whether that be on the film licensing, the box office draw, the overall budget itself, or, forgive TWM+ because there seems to be very little specification on what would be tariffed, and TWM will definitely circle back to that, then how would charging them more money to make movies in the States bring them back? It’s a pressure point, but it doesn’t seem as though it’s a pressure point indicating that it will bring work back to the States. If anything, there is no incentive to shoot in the United States as costs of all goods become increasingly pricier. For example, a vast majority of cameras are imported to the United States and either are or are not subject to tariffs depending on the whim of one person in a position of power, and the cameras manufactured here use technological parts that are imported. Not to mention, even in a world where cameras manufactured in the States do have all the required assembly pieces available locally, if a competitor raises their product price by 20%, a company can raise theirs by 10% and still be the market leader. Therefore, even cameras manufactured in the United States are suddenly more expensive to utilize while making your film. One could subject the same common sense argument toward anything on a movie production currently being subject to tariffs. Not only do studios not have incentive to shoot films in the U.S. to offset expenses, they also are being punished for not making films in the United States. This wouldn’t increase production in the United States as much as discourage production period, offering fewer entertainment options for U.S. consumers, and ultimately price out independent studios altogether. Taking choice out of consumers hands is inherently anti-American, but with recent quotes such as “your child maybe only get two dolls for Christmas instead of 30” amidst a trade war with China, it’s rather par for the course as the messaging implies United States dollar is about to get general shoppers a lot less than it currently does.
Beyond the potential ramifications of fewer productions entirely allowing fewer voices, fewer choices, and most likely very few original risks stifling the art of a media medium that an estimated 80% of Americans indulge in on a daily basis, the tariffs seem poorly thought out and not-at-all planned. Consider the quote earlier in the article from the POTUS, for example. Nowhere in the quote does Donald Trump clarify what will be tariffed. Deputy Press Secretary Kush Desai has confirmed that an actual edict has not been rendered, and no decision is imminent, leading many to pass it off as a move of political theater. On May 5th, Trump said that he would meet with film executives to discuss possible tariff solutions. Major studios have yet to deliver a comment on the threat of tariffs. Perhaps the reason a decision has yet to be made, though, is because it doesn’t seem feasible.
A tariff, by definition, is a import/export tax. If Art Vandelay were to choose to import or export, for example, latex, or matches, or chips, some potato, some corn, he would have to pay a rate tax based on the value of the good he is bringing in to a given country. However, tariffs are for exclusively physical goods because they require the act of being taken through border patrol. With the exception of the very rare film reel, movies are exclusively digitalized and have been since the late-1990s. These copies are transferred digitally, making it impossible to tariff the good because the physical good simply does not exist. Furthermore, per the World Trade Organization, digital goods are not allowed to be subject to tariffs even if a country were to find a way to do so. The Information Technology Agreement, signed by every country in the WTO, including the United States, has been in place since the Clinton administration and does not allow for customs on e-transmissions. While Trump has had his differences with the WTO in the past, notably in 2019 about their appeals court judges and March of this year when he tried to pull U.S. funding, the United States is still responsible for the agreements that the country has made, and going against such policy would become a geopolitical nightmare, likely cutting off the U.S. resource supply from every first-world country in the globe. Not to mention, the President of the United States, per the U.S. law, is not granted power to deliver tariffs unilaterally. However, without Congress intervening and reigning in the power, this legal framework has been put to the wayside a little bit per the Trade Expansion Act of 1962. While U.S. law normally requires the President to have oversight from the legislative branch of government to implement tariffs, the act signed into law by President Jack Kennedy allows for a President to implement a tariff should his Secretary of Commerce deem it an immediate national security threat. Like most Trump tariffs implemented under this statute, ranging everywhere from aluminum to now film, Trump has yet to elaborate what the threat to national security entails, raising many eyes in the U.S. government as to the legality of the tariffs that are causing uncertainty in the U.S. economy. Another statute Trump has cited, seemingly the only other statute that gives him legal power to implement tariffs at his behest, is Section 301 of the Trade Act of 1974 signed into law by President Gerald Ford. This allows the United States Trade Representative, in this case Jamieson Greer, to implement tariffs for up to four years if the President deems our trade deal ‘unreasonable, unjustifiable, or discriminatory.’ This is unlikely to be a problem here seeing as the U.S. has its largest trade surplus in the film industry.
Exploring more U.S. Code, Title 50, Section 4305 explicitly states that “…the authority granted to the President by this section does not include the authority to regulate or prohibit, directly or indirectly, the importation from any country, or the exportation to any country, whether commercial or otherwise, regardless of format or medium of transmission, of any information or informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds.” The only exception given is that of which violates U.S. terror law, making it unlikely Trump has any legal leg to stand on even if he were to prove that national security is at stake should Congress do their job and abide by current U.S. law. Junior Senator Rand Paul (R-Kentucky) recently introduced legislation to pull back the power to Congress as written in the U.S. Constitution as part of a bipartisan piece, though it fell just short of enough votes. As the legislation continues to be rewritten, Trump’s power to implement tariffs is likely to be revoked well before midterms.
However, should Trump find an avenue to implement his planned tariffs, the four possible outcomes are that it could be on licensing deals, which would raise costs for both theater exhibitors and streaming services, or one of the three outcomes in where the cost goes directly to the studio: box office gate, cost of production, or a percentage based on where it’s shooting. The final scenario assumes that the tariff would be based on how much of the film is shot outside of the States, if it’s specific to just Hollywood studios. There’s still very little clarification on whether it’s going to be against foreign films airing domestically, or all films that opt to shoot in a small town in London rather than a small town in New Hampshire. Either way, studios likely would not voluntarily eat the loss, causing the price of the ticket to go up even higher. The average movie ticket currently sits between $12-$13, half of each ticket sold, give or take as the number goes down later in the films run, goes to the theater. That means currently anywhere from $6-$7 per movie ticket sold goes directly to the studio. If this is tariffed by 100%, the studio needs to recoup the cost somehow, likely raising the average ticket price from $13 to $20, or, making a standard showing the price of a Dolby, IMAX, or RPX showing while also raising prices for the premium formats as well. Ultimately, tariffs on films would become a consumption tax on the U.S. consumer. The bigger problem is that even when these tariffs are taken off, whether by Trump or the eventual winner of the 2028 U.S. election, the studios will see that consumers have become comfortable paying more money for the same production, artificially increasing the price of cinema tickets and/or streaming prices in a way that they’re unlikely to come back down.
Ultimately, there is a problem, and whether it’s a problem that the United States needs to focus on ahead of some of its other issues is up for debate, but putting policy in place to solve a problem is never a bad thing. Putting the same blanket policy on everything instead of addressing their problems, both in and out of the entertainment industry, is something else entirely, and one that could ultimately cause even more frustration within U.S. marketplaces going forward. What do tariffs on films entail? Nobody really knows. What they don’t know? They also don’t know. Is it that tariffs on digital goods are possible? Or is it that they’re even legal? Do tariffs make sense in an industry where the U.S. already lays claim to the biggest trading surplus in the world? When would this start? What would the tariffs actually be on? TWM+ seemingly are going to find out with the rest of you. What we do know is that a message that we cannot compete with other countries, offer comparable value of other countries, and do not believe in American innovation in the arts enough to warrant incentivizing what we want from U.S. companies so the U.S. will punish these companies is not a winning message, nor should it be an edict from America’s Commander in Chief.
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