Trump Proposes 100% Tariff on International Films
Donald Trump pictured with his Hollywood Walk of Fame star in 2007. Hollywood’s film industry might be impacted by his proposed new tariffs Source: New York Times.
On Monday, September 29, President Donald Trump wrote on social media that he authorized the United States Department of Commerce and the Office of the U.S. Trade Representative to impose a 100 percent tariff on all foreign-made movies. President Trump has threatened such actions before, which he claims are meant to protect the “movie-making business [that] has been stolen from the United States of America, by other Countries.”
This decision was made in the face of American movies increasingly sending production overseas, where tax incentives and lower labor costs can save companies millions of dollars. This internationalism of films produced by American companies reduces American jobs in the film industry and leaves domestic filming hubs such as Los Angeles and Atlanta scrambling to retain companies.
While there are no concrete details on when this tariff might take effect, or the specifics of such a tariff, a move like this could be difficult to put into effect. Movies can be transmitted digitally, meaning that they don’t need to go through ports or other access points to enter the country, making it extremely difficult to tax products that do not flow through such physical points of access. As such, it is unclear how a tariff like this would work. Furthermore, it is complicated to classify which movies would fall under these tariffs, primarily whether international movies are classified as such based on shooting location, parent company, crew or actor nationality is highly unclear and reveals the nuances of filmmaking. Many movies have variation in all of these factors, including being funded by a variety of sources that could be both American and international.
Despite production being sent overseas, America still produces a huge amount of money from the production and sale of movies. American movies overwhelmingly dominate the foreign market, with the Motion Picture Association noting that American films “generated a positive balance of trade in every major market in the world.” This positive trade balance could be damaged, and backfire on Trump’s intentions, if other countries chose to put retaliatory tariffs in place, closing international markets to American films.
Moreover, international films have a comparatively small market share in the U.S compared in other countries. While there have been notable international blockbusters in recent years like the South Korean film Parasite, American movies still overwhelmingly dominate the domestic market. Despite Trump’s claims that the “Movie Industry in America is DYING a very fast death,” it seems as though American film dominance continues.
Because of the domestic dominance of American movies, there is very little to gain by imposing these tariffs. There is, however, a lot to lose. Many studios rely heavily on international co-production and international markets, where American movies gross huge sums of money. If the ability to attract investors and producers from abroad gets suppressed by these tariffs, the funding for American movies could be severely diminished. This lack of funding could mean reduced quality of films and higher costs for consumers as film studios seek to maintain profit margins. Furthermore, if countries respond to this move with retaliatory tariffs, entire markets could be closed to American films, lowering the profits for American film creators.
Trump’s intentions to help American filmmakers with this 100% tariff on international movies might end up causing more harm than good to the American filmmaking industry.. While the move might encourage the production of more American film jobs, the complications associated with filming, production, and distribution might shake America’s dominance in the international film market.