Donald Trump's surprise announcement of potential 100% tariffs on films produced outside the US with foreign tax incentives has sent shockwaves through Hollywood. The move comes as the film industry grapples with the pandemic's impact, strikes, and wildfires in Los Angeles. While Trump claims his goal is to boost US jobs, the lack of details and the swift negative market reaction indicate significant uncertainty.
Stock prices for major studios like Netflix, Disney, and Warner Bros. immediately dropped following the announcement. While the White House stated no final decisions had been made, Trump's Commerce Secretary confirmed his office was working on implementation. The Motion Picture Association (MPA) argues that a federal tax incentive is needed to compete globally, noting the US currently has a positive trade balance in film services. Industry professionals express deep concern over the lack of clarity on the tariffs' implementation, especially regarding films already in production.
Trump's claim that Hollywood is making few films isn't entirely inaccurate. US film production, particularly of movies under $40 million, has declined substantially due to tax breaks and lower labor costs offered in other countries. Major blockbusters, like recent Minecraft and upcoming Mission: Impossible and Avatar sequels, are primarily filmed overseas. This situation has worsened with recent actor and writer strikes.
Trump's attempt to revive Hollywood isn't new. Appointing Mel Gibson, Jon Voight, and Sylvester Stallone as 'special ambassadors' to the industry in his second presidential term was intended to foster a 'golden age' of cinema. However, the ambassadors' effectiveness remains questionable, with some industry members suggesting their role is symbolic and initiatives like ‘Stay in LA’ have reportedly received no response.