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Hollywood braces for Trump's newest trade battle

In a surprising twist, former President Donald J. Trump has announced his latest move in the tariff war, aiming at Hollywood this time around.

Taking to his Truth Social platform, Trump announced that he had authorized the Department of Commerce and the Office of the U.S. Trade Representative to impose a steep 100% tariff "on any and all Movies produced outside the U.S."

Criticizing other countries' initiatives to attract filmmakers, Trump labeled the situation as a "National Security threat" and deduced it to be "messaging and propaganda" meant for the degradation of American movies. In a nutshell, Trump argued that incentives offered by foreign countries were part of a coordinated effort to sabotage the U.S. film industry.

The White House is said to be currently evaluating how to adhere to Trump's directive, stating, "Although no final decisions on foreign film tariffs have been made, the Administration is exploring all options to safeguard our country's national and economic security while Restoring Hollywood's Glory."

The U.S. film industry has witnessed a shift over the years, with numerous productions taking advantage of incentive programs offered by countries like Canada, the United Kingdom, and New Zealand. It's not unusual for large and small films to involve production in multiple countries, with popular movies like "Mission: Impossible - The Final Reckoning" being a prime example.

The proposed tariffs aim to steer consumers toward American-produced films, although it's worth noting that American-made movies dominate the domestic market, to begin with. For instance, China, which has amplified domestic movie production, witnessed the animated blockbuster "Ne Zha 2" grossing an astonishing $2 billion this year, yet sales in North America totaled a mere $20.9 million.

Economic analysts estimate that the film industry in New Zealand, where governments have provided rebates and incentives, has generated billions of dollars in tourism revenue. Tax incentives have played a significant role in attracting production, with foreign films like "The Lord of the Rings," "The Hobbit," "Minecraft," and numerous American productions of 2023 contributing substantially to the country's revenue.

New Zealand Prime Minister Christopher Luxon awaits more details on Trump's proposals before commenting, emphasizing that New Zealand boasts a world-class film industry, unrivaled by any other location.

The Motion Picture Association, which represents major U.S. film studios and streaming services, did not respond to Sunday's request for comment. Moreover, it's important to note that Hollywood exports have dominated cinemas, yielding $22.6 billion in exports and a trade surplus of $15.3 billion in 2023.

Trump has earned the "tariff man" label by imposing new taxes on goods made in countries worldwide. His measures have affected various sectors, including imposing a 145% tariff on Chinese goods and a 10% baseline tariff on goods from other countries, with even higher levies threatened.

Trump's unilateral imposition of tariffs has given him extraordinary influence over commerce, creating political risks and pulling the market in different directions. Tariffs on autos, steel, aluminum, pharmaceutical drugs, and more are now in place or set to be imposed soon.

Trump has expressed concern about movie production moving overseas for years. In the past, he appointed actors Mel Gibson, Jon Voight, and Sylvester Stallone as "special ambassadors" to Hollywood, with the aim of returning Hollywood to its former glory.

Unfortunately, the U.S. film and television production has faced challenges in recent years, with setbacks from the COVID-19 pandemic, Hollywood guild strikes, and wildfires in the Los Angeles area. Overall production in the U.S. was down 26% in 2022 compared to 2021, according to data from ProdPro.

A survey of executives, asking about preferred filming locations, found that no U.S. location made the top five. Toronto, the U.K., Vancouver, Central Europe, and Australia ranked the highest, with California following in sixth place, Georgia seventh, New Jersey eighth, and New York ninth. The problem is especially acute in California, where production was down 5.6% in 2022 compared to 2023, according to FilmLA.

U.S. cities like Atlanta, New York, Chicago, and San Francisco have also used aggressive tax incentives to lure film and TV productions. Tax credits have proved effective in places like Georgia and New Mexico.

In summary, Trump's proposed tariff on foreign films presents an intriguing scenario with significant potential cultural and economic consequences domestically and internationally.

This article was compiled using information from Associated Press reporters JILL COLVIN and JAKE COYLE, along with insights from various economic and cultural analyses.

The U.S. film industry has been bracing for Trump's newest trade battle, as the former President Donald J. Trump has announced his intent to impose a 100% tariff on movies produced outside the U.S.
In response, the White House is exploring options to safeguard the country's national and economic security while restoring Hollywood's glory, as stated by an official.
Trump has argued that incentives offered by foreign countries to attract filmmakers are part of a coordinated effort to sabotage the U.S. film industry, labeling it a national security threat and messaging and propaganda.
Despite the proposed tariffs aiming to steer consumers toward American-produced films, American-made movies generally dominate the domestic market.
For instance, the animated blockbuster "Ne Zha 2" grossed $2 billion in China this year, but sales in North America totaled only $20.9 million.
Economic analysts estimate that the film industry in New Zealand, which provides rebates and incentives, has generated billions of dollars in tourism revenue, with foreign films contributing substantially to the country's revenue.
Trump's unilateral imposition of tariffs has influenced commerce and created political risks, affecting various sectors, including autos, steel, aluminum, pharmaceutical drugs, and more.