Trump Plans 100% Tariff on Foreign Films

The entertainment industry faced a major shock yesterday when President Donald Trump announced plans to impose a 100% tariff on films produced outside the United States, citing concerns about Hollywood's decline and framing international production as a national security issue^1.

As of this morning, the White House has clarified that "no final decisions" have been made regarding the implementation of these tariffs, though the administration continues exploring options to fulfill the president's directive^2.

The announcement, made via Truth Social on Sunday evening, sent media stocks tumbling in early trading.

Netflix $NFLX ( ▼ 1.94% ) led the decline with a drop of nearly 5% in pre-market trading, while Disney $DIS ( ▼ 0.41% ) , Warner Bros. $WBD ( ▼ 1.99% ) , and Paramount $PARA ( ▼ 1.58% ) each saw declines between 1-3%.

By mid-morning, the market had partially recovered, though Netflix continued experiencing the most significant impact.

The Rationale Behind the Tariff Proposal

President Trump's announcement pointed to what he described as the "very fast death" of the American film industry, attributing this decline to foreign incentives designed to attract filmmakers and studios away from the United States^1.

Trump characterized this trend as a coordinated effort by other nations that poses both an economic and national security threat^3.

The administration's concern isn't entirely unfounded.

For years, tax incentives have increasingly redirected film production from California to other states and countries offering more favorable financial benefits.

Productions regularly choose locations like Canada, the United Kingdom, and Australia over domestic options, primarily due to:

Key Factors Driving International Production:
- More generous tax incentives outside the US
- Lower labor costs in many foreign markets
- Established production infrastructure in competing regions
- Currency exchange advantages (particularly with Canada)
- Access to international talent pools

According to industry research, most nominees for this year's Oscar for best picture were filmed outside the United States, and a survey of studio executives about preferred filming locations for 2025-2026 showed that the top five choices were all international^12.

Current State of the US Film Industry

While Trump's announcement portrays a dire situation for Hollywood, the reality is more nuanced.

The domestic film industry has faced significant challenges in recent years, but continues to show signs of resilience.

The US remains a major film production hub, and according to industry data, 2025 has seen a rebound in box office numbers compared to last year, with domestic revenues rising by 15.8%^5,^19.

The broader film and video market is also growing, expected to increase from $308.47 billion in 2024 to $328.49 billion in 2025, representing a compound annual growth rate of 6.5%^11.

However, production expenditures have decreased by approximately 20% compared to previous years as studios continue trimming budgets to recover from pandemic-related losses^5.

The industry also faces ongoing challenges from streaming competition, shifting consumer habits, and the lingering impacts of both the COVID-19 pandemic and the 2023 writers' and actors' strikes^10.

Implementation Challenges

One of the most significant questions surrounding Trump's announcement is how such a tariff would actually work in practice.

Films are classified as intellectual property rather than tangible goods, categorizing them as a service not currently subject to traditional import tariffs^14.

Unanswered Implementation Questions:
- Would tariffs apply to streaming platforms or just theatrical releases?
- How would tariff amounts be calculated? (Production costs? Box office earnings?)
- Would tariffs target only films receiving tax breaks from foreign nations?
- What about films partially filmed abroad or using international visual effects work?
- Would American production companies filming overseas be affected?
- How would this impact foreign-language films intended for art house theaters?

Most major films today have complex international production chains.

A typical superhero blockbuster might involve filming in multiple countries, post-production work in Canada, and visual effects development across studios in Southeast Asia and Europe^8.

From a technical standpoint, most films viewed in American theaters are still "produced" within the United States- scripts are written, preproduction organized, actors cast, and editing completed domestically, even when actual filming occurs overseas^8.

Potential Industry Impact

If implemented, a 100% tariff on foreign-made films could dramatically reshape the global entertainment landscape.

Industry analysts suggest several possible outcomes:

A mandated return to US production would likely increase budgets significantly at a time when the industry is already working to control costs.

According to industry analyst Barton Crockett at Rosenblatt Securities, this could result in studios producing less content overall^12.

There's also a substantial risk of retaliatory measures against American films in international markets, with China already pledging to limit Hollywood imports following Trump's aggressive tariffs.

The US film industry currently generates substantial export revenue, with American movies bringing in $22.4 billion internationally and creating a trade surplus of $9.3 billion in 2023, according to Motion Picture Association data^12.

Any policy that risks this positive trade balance deserves careful scrutiny.

Streaming Services in the Crosshairs

Streaming platforms could be particularly vulnerable to these proposed tariffs.

Netflix, which relies heavily on its international production network to create content for global viewers, saw the steepest stock decline following the announcement.

Major Streaming Platforms by International Production Volume:
- Netflix: Extensive global production footprint (Spain, UK, Korea, Canada)
- Amazon Studios: Significant international production (UK, India, Australia)
- Apple TV+: Growing international slate (UK, Canada, Australia, New Zealand)
- Disney+: Expanding global production (UK, Australia, Canada)
- HBO Max/Max: Moderate international production (UK, Europe)

The streaming wars have pushed companies to develop more international content, both to appeal to global audiences and to manage costs.

A tariff that significantly increases the expense of importing this content could force a strategic rethinking across the industry at a time when profitability is already challenging for many streaming services^10,^20.

Global Response and Market Reaction

The announcement has stirred confusion throughout the European film sector and other major production hubs.

Industry professionals in the UK, where many US films are currently in production, have expressed particular concern^21.

A forced transition to exclusively domestic production raises practical questions about films that require international settings or specialized facilities only available in certain regions.

By late morning, US markets had recovered somewhat from deeper early losses, though media stocks continued to underperform the broader market^22.

The proposed tariffs come at a challenging time for the entertainment sector, which was rallying around what industry insiders had dubbed "Survive till '25" after multiple difficult years^10.

White House Clarification

This morning, White House spokesperson Kush Desai issued a statement indicating that while the administration is exploring all options to deliver on President Trump's directive, no final decisions regarding foreign film tariffs have been made^2.

This clarification has provided some reassurance to markets but leaves significant uncertainty about the administration's ultimate intentions.

Looking Ahead

The proposed tariffs represent yet another development in Trump's broader trade policies, which have already included substantial levies on imported steel, aluminum, and automobiles^9.

The entertainment industry now joins numerous sectors adjusting to the administration's aggressive stance on trade.

As this situation develops, key factors to watch include:

1. Formal proposals from the Department of Commerce or US Trade Representative

2. Industry lobbying efforts through organizations like the Motion Picture Association

3. Potential legal challenges to tariff implementation

4. International responses, particularly from major production hubs

5. Studio strategy shifts in anticipation of possible tariffs

For investors, production companies, and industry professionals, the coming weeks will be critical as more details emerge about the administration's plans and how they might reshape the economics of global filmmaking.