The Fallout of Trump’s Planned Tariff on Film Industry

The stocks of entertainment companies were negatively impacted by the president’s proposed 100% levy on foreign-produced films.

Although there are yet few details on how the government plans to carry out the policy, President Trump’s proposed 100% tariff on foreign-produced films had an early impact on the stocks of entertainment companies on Monday.

During morning trade, shares of Netflix, Disney, Warner Bros. Discovery, and Paramount fell by at least 2%.

In a Truth Social post on Sunday evening, Trump claimed to have approved the new tax on foreign-made movies. He referred to it as a reaction to tax breaks that have attracted many Hollywood projects to the United States.

American studios sometimes shoot their movies in the UK and Canada, as seen in “A Minecraft Movie,” this year’s highest-grossing movie.

The president wrote, “The American film industry is dying a very quick death.” “A concerted effort by other nations and, therefore, a National Security threat,” he said of international filmmaking incentives. It is propaganda and messaging on top of everything else!

Executives from Hollywood studios rushed on Sunday night to ascertain the implications of the revelation for their operations. According to executives, they were not informed of the tariff plan’s potential operation or given any advance notice.

Since movies are not physical things that travel through ports like most other items subject to tariffs, it is unclear how such a tariff would operate. The Trump administration would have to decide what the threshold would be to identify a film as an import and how much a film would be worth in order to impose the duties.

Since the majority of big-budget event pictures make their money abroad, Hollywood studios could be destroyed if other nations applied reciprocal levies.

Trump claimed to have given the U.S. Trade Representative and the Commerce Department permission to start the process of imposing a 100% tariff on foreign-produced films right away.

U.S. Commerce Secretary Howard Lutnick wrote on X on Sunday, “We’re on it.”

According to a report released by the Motion Picture Association, an industry trade group, the U.S. film industry generated a positive balance of trade with all major overseas markets and had a $15.3 billion trade surplus in 2023.

“Mission: Impossible—The Final Reckoning” and “Jurassic World Rebirth,” two of the summer’s largest productions, were produced mostly or entirely outside of the United States.

Hollywood projects have found success in London in particular due to its tax breaks, vast infrastructure, which includes spacious soundstages, and English-speaking personnel. There, Disney’s Marvel Studios is filming two upcoming Avengers sequels.

According to data firm ProdPro, the total amount of money spent on U.S. film and television productions with budgets exceeding $40 million decreased by 26% from the previous two years. Although neither market has yet to overtake the U.S., it increased throughout that time in the U.K. and Canada.

A request for comment was not immediately answered by the White House.

Actors Sylvester Stallone, Mel Gibson, and Jon Voight were named by Trump as his “special ambassadors” to Hollywood in January. He promised to assist in reviving Hollywood companies that had been lost to other nations.

“These three exceptionally gifted individuals will serve as my eyes and ears, and I will carry out their recommendations,” he declared.

Source : WSJ.COM

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