Trump's Proposal for Hollywood Tariffs Sparks Perplexity and Anxiety
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Donald Trump's recent pitch on Sunday to slap tariffs on foreign-made films has raising eyebrows and concerns within the entertainment industry. By lunchtime on Monday, White House officials clarified that "no concrete decisions" had been made yet, stating that they were merely "brainstorming potential strategies."
In his tweet on Truth Social, Trump proposed tariffs on any foreign films, citing foreign countries' offers of incentives as harmful to the U.S. movie industry, declaring, "WE WANT MOVIES MADE IN AMERICA, AGAIN."
Speaking from the Oval Office at 2 p.m., Trump revealed he'd be meeting with industry heavyweights to ensure they were "satisfied" with the proposed tariffs plan. "I'm not looking to harm the industry; I'm trying to help," he explained.
Industry pros and experts reacted negatively to the initial plan. Morgan Stanley analysts opined that a 100% tariff on some or all film-related costs would result in fewer movies, more expensive films, and decreased earnings for everyone involved.
"The reality is that for any given film, there can be screenwriting, production, editing, post-production, visual effects - all carried out in different countries," they noted.
The analysts pointed out that Trump's proposal didn't provide insight into whether the tariffs would apply to TV productions, what specific parts of the production would be taxed, and how the tariffs would be charged.
The entertainment sector endures a challenging period as it grapples with social media, altering tastes among viewers, the looming dawn of artificial intelligence, and the hangover from the writers' strike, which has disrupted revenue streams and box-office returns. Last year's box office revenue stood at $8.75 billion, marking a 3% decline from 2023 and a far cry from the pre-pandemic average of $11 billion.
Despite this, Hollywood has increasingly opted to export production overseas, with Canada, New Zealand, and especially the U.K., seeing heightened spending and investment. Last year's top live-action titles – "Deadpool & Wolverine," "Wicked," and "Dune: Part Two" – were filmed outside the U.S.
Unlike most industries Trump has targeted with tariffs, the U.S. entertainment industry boasts a trade surplus with the rest of the world, thanks to ongoing foreign interest in American titles. Multiple Hollywood reps declined to share their views on Trump's proposal or did not respond to requests for comment.
The proposal's financial repercussions were already being felt: In Monday trading, shares of entertainment giants like Netflix, Paramount, and Warner Bros. Discovery plummeted.
The proposal comes after Trump appointed Mel Gibson, Sylvester Stallone, and Jon Voight as "special ambassadors" to revive "lost business." Notably, all three men are Trump supporters and harbor conservative leanings.
White House officials initially referred additional queries about the proposed tariffs to the Commerce Department. Commerce Secretary Howard Lutnick responded with "We're on it" via a post on X, after a repost of Trump's Truth Social post.
Other analysts were more optimistic about content companies' ability to sidestep the tariffs, stating that as long as some part of production occurred within the U.S., the tariff could be "avoided or minimized." However, they added that companies might shift some production aspects stateside to placate Trump, which would impact profit margins.
More significantly, these analysts predict that the tariffs episode could eventually fade away, citing potential opposition from foreign countries and political maneuverings as factors that might change Trump's mind in the long run.
- The entertainment industry's concern over Donald Trump's proposed tariffs on foreign films has extended to policy-and-legislation, as industry experts fear such a policy could lead to trading disadvantages in the global market.
- Within the scope of general-news, Trump's appointment of Sylvester Stallone, Mel Gibson, and Jon Voight as "special ambassadors" to revive "lost business" in the entertainment sector raises questions about the potential involvement of politics in industry investments and partnerships.
- In the midst of an evolving entertainment landscape where trading costs are affected by social media, artificial intelligence, and politics, the impact of Trump's tariff proposal on the overall investment and production strategies of entertainment companies is a matter of ongoing interest and discussion.
