Donald Trump’s bombshell announcement that “Movies coming into our Country that are produced in Foreign Lands” will be subject to an 100% tariff has certainly caught the attention of Hollywood, as well as the international film industries it seems to be aimed at – principally Canada, the UK, Australia and New Zealand, as well as European countries such as Hungary and Italy that have often acted as bases for US film production.
Vague and grandstanding at it is – Trump concluded his post with an all-caps “WE WANT MOVIES MADE IN AMERICA, AGAIN!” – the chaotic roll out of previous Trump tariffs has triggered feverish speculation, as well as defiance, in the film industry in exactly how this might play out.
The practicalities of how a tariff might be imposed on a film is far from clear. Trump appears partly motivated by China’s decision to limit imports of Hollywood films as part of its tit-for-tat trade war with the US, but a quota system into North America would appear, on the face of it, to be unworkable. Films are no longer manufactured objects that have to pass through a port of entry into the US, and their nationality of production is far from clear. Most film production – and indeed TV shows – are a complex patchwork of corporate investment, globally sourced labour and multinational revenue. Some are tiny, hand-to-mouth operations, others are gigantic behemoths whose turnover dwarfs the GDP of a minor island nation. Added to which, the digital evolution has allowed it to become a fully globalised industry that moves too fast to allow the imposition of consistent financial levies.
However, Trump’s target does not appear to be foreign films per se, but rather the outsourcing of production by Hollywood studios who for decades have used overseas studios and locations to lower costs as well as take advantage of interesting or unusual backdrops. To take some random recent examples: the new Tom Cruise film Mission: Impossible – The Final Reckoning was mostly shot in the UK, at Longcross studios in Surrey and the Lake District, but also in Malta, Norway and South Africa, as well as an American aircraft carrier docked in Italy. Marvel’s new superhero blockbuster Thunderbolts* was filmed in Atlanta Georgia, but a key scene took place at Merdeka 118, a skyscraper in Kuala Lumpur, Malaysia, and its score was recorded at Abbey Road studios in London.
Revenue plays a large role in Hollywood thinking. While North America (comprising the US and Canada) remains the biggest single market, with around $8.8bn (£6.6bn) in box office takings in 2024, it is dwarfed by international income of around $21.1bn. It is capturing a significant proportion of this that has geared Hollywood to its internationalist thinking, from shooting in locales and casting actors designed to appeal to specific audiences, to continent-hopping global roll-outs with large-scale premieres taking place in different cities across the world.
So the questions are being asked: what would make an individual movie incur tariffs? If it is released in cinemas (in which case expect a wholesale shift to streaming)? Would it include streaming releases (in which case a wholesale rebranding as “TV shows”?) And what would actually be taxed? Could an American-produced, (mostly) British-shot film such as Ghostbusters: Frozen Empire really incur import duty? Would distributors of non-American films have to pay a levy to release them in the US? In any case, if a film shows on streaming, consumers don’t pay directly to watch it, but for a subscription to a platform, so the idea of targeting an individual film’s streaming revenue appears meaningless.
More pragmatically, Trump appears to be taking aim at the system of tax subsidies that allow Hollywood producers to accrue large sums if they shoot at studios in qualifying countries. It was recently revealed, for example, that Universal Studios received £89m from UK taxpayers after agreeing to film Jurassic World: Rebirth in Elstree in Hertfordshire. This partly explains the decline in film production in Los Angeles – nearly 40% in the last decade, according to FilmLA – but the California film industry has also been under attack from other production centres in the US, where states such as New York and Georgia offer tax incentives. California governor Gavin Newsom, a regular target of Trump, recently announced a $750m scheme to try to reverse the industry decline in his state, and Trump’s announcement was in some ways clearly a shot across his bows after Newsom filed a lawsuit in April against Trump’s use of the International Emergency Economic Powers Act of 1977 (IEEPA) to impose tariffs in other industries.
The current thinking is that Trump’s most realistic option is to levy a tariff on any financial packages a film receives from a foreign government, rather than tax cinema tickets or streaming subscriptions. However, the effect of any tariff is likely to be dramatic. Recent figures from the British Film Institute (BFI) show that in 2024 £4.8bn($6.37bn) of production spend on film and high-end TV in the UK came from international sources, 86% of the total spent on film and TV made in Britain. In Australia, the film industry stands to lose up to AUS$767m. A programme of studio building in the UK, designed to increase capacity and therefore revenue, is likely to feel the chill almost immediately. And the effect on the domestic industry in the US is forecast to be adverse, as production costs rise without the injection of overseas tax incentives, with mid-level projects potentially wiped out.
But whether, as Newsom suggests, this is all a “distraction”, or if this announcement turns into something more solid, a shocked film industry is waiting to find out.
