President Donald Trump announced in a post on Monday his intention to impose a 100% tariff “on any and all movies that are made outside of the United States.” Trump did not provide details regarding the timing or implementation of the tariff. If Trump proceeds with his threat, it would represent a notable precedent, as it would be the first instance of a tariff being imposed on a service rather than a tangible good. The president first proposed a complete tariff on foreign-produced films in May, contending that tax incentives provided by other nations have lured filmmakers away from domestic production. In his post on Monday, he highlighted California, stating that the state “has been particularly hard hit!” The state has proposed and implemented numerous tax incentives, a trend also observed in various American cities.
Hollywood was entirely unprepared when Trump initially unveiled the tariff in May. “At first glance, it’s startling and would signify an almost total cessation of production,” one industry insider remarked. “However, in practice, he lacks the authority to undertake this action, and the complexities involved render enforcement impractical.” American actors and directors typically exhibit a preference for proximity to their residences in their professional engagements. However, “the fact is, it’s cheaper for Hollywood studios to pay for everyone to get on planes, pay for hotels, because the cost of labor, lack of rebates and the ability to make things overseas is infinitely cheaper,” stated Jay Sures. Share of Netflix opened down 1% Monday morning following Trump’s post, while other movie-related companies, including AMC and The Walt Disney Company, opened higher.
In the United States, movie ticket sales have experienced a decline, attributed to a significant reduction in the number of major releases in theaters since the pandemic. Concurrently, consumer preferences have shifted towards streaming platforms for home viewing. The US box office gross reached nearly $12 billion in 2018, only to plummet to slightly above $2 billion in 2020, a year marked by widespread theater closures due to the Covid pandemic. Despite the recovery of theaters, the volume of releases stands at approximately fifty percent of the levels observed in 2019. The total domestic box office gross has not surpassed $9 billion since that time.
Warner Bros. Discovery, has achieved $4 billion in global box office sales this year, marking it as the first studio to reach this milestone. In addition to films, Trump is preparing to implement a series of new tariffs. As of Wednesday, the administration plans to implement a 100% tariff on branded drugs, with certain exceptions; a 25% tariff on heavy trucks; a 50% tariff on kitchen cabinets and vanities; and a 30% tariff on upholstered furniture. In a distinct social media announcement on Monday, Trump indicated his intention to implement a “substantial” tariff on all furniture imported into the United States.