Jenna Schoenefeld for The New York Times
By German Lopez
Hollywood recently got the Trump tariff treatment. On Sunday, the president announced a 100 percent tariff on movies made outside America. Filmmakers said the move would hurt U.S. filmmaking. Shares for Netflix and other entertainment companies fell. The next day, the White House said no tariff would take effect.
We’ve seen this before for other sectors of the economy. But why would President Trump think Hollywood could benefit from more protectionism? Today’s newsletter looks at the headwinds the industry faces.
Hollywood’s problems
When Trump talks tariffs, he typically speaks about manufacturing. He invokes American industries that have fallen from grace — steel, coal, cars — and the physical goods that they once made for the world. He complains that the United States imports more goods than it exports, leading to a trade deficit.
On set in Montana. Janie Osborne for The New York Times
Hollywood doesn’t fit that description. It remains the world’s dominant moviemaking industry. American film exports are three times as high as imports, according to the Motion Picture Association. Movies are also a service; the product is entertainment, not a physical good. And unlike with goods, the United States has a nearly $300 billion trade surplus with services.
Still, Hollywood has problems. For one, fewer movies are made in Los Angeles nowadays. Filming has moved to other states and, increasingly, overseas. Other countries offer cheaper labor and tax credits for filmmakers. This has erased jobs once held by Americans. “WE WANT MOVIES MADE IN AMERICA, AGAIN!” Trump posted online.
Tariffs, however, are a messy solution to Hollywood’s problems.
A levy on a Chinese-made phone is simply applied to the value of that product. But what would a tariff on movies look like? Would it apply to the production costs? Box office earnings? Would it depend on how much of a movie is filmed and edited abroad? What about movies — think of “James Bond” or “Harry Potter” — that require overseas filming? Would the toll apply to TV shows? Filmmakers say that a 100 percent tariff will force them to halt production altogether.
Tariffs could also backfire. Other countries could put their own levies on U.S. movies. That could hurt global ticket sales. Most studio revenue is now international, Axios noted.
The industry says it prefers a carrot instead of a stick: America could lure back moviemakers with its own tax credits. This is the approach that California’s governor, Gavin Newsom, backed on Monday when he called on Trump to support a $7.5 billion federal tax break for films made in America.
But that would cost money at a time when Congress is already struggling to find ways to pay for tax cuts the president wants. So Trump once again invoked tariffs as his favored fix.
When Trump talks tariffs, he typically speaks about manufacturing. He invokes American industries that have fallen from grace — steel, coal, cars — and the physical goods that they once made for the world. He complains that the United States imports more goods than it exports, leading to a trade deficit.
On set in Montana. Janie Osborne for The New York Times
Hollywood doesn’t fit that description. It remains the world’s dominant moviemaking industry. American film exports are three times as high as imports, according to the Motion Picture Association. Movies are also a service; the product is entertainment, not a physical good. And unlike with goods, the United States has a nearly $300 billion trade surplus with services.
Still, Hollywood has problems. For one, fewer movies are made in Los Angeles nowadays. Filming has moved to other states and, increasingly, overseas. Other countries offer cheaper labor and tax credits for filmmakers. This has erased jobs once held by Americans. “WE WANT MOVIES MADE IN AMERICA, AGAIN!” Trump posted online.
Tariffs, however, are a messy solution to Hollywood’s problems.
A levy on a Chinese-made phone is simply applied to the value of that product. But what would a tariff on movies look like? Would it apply to the production costs? Box office earnings? Would it depend on how much of a movie is filmed and edited abroad? What about movies — think of “James Bond” or “Harry Potter” — that require overseas filming? Would the toll apply to TV shows? Filmmakers say that a 100 percent tariff will force them to halt production altogether.
Tariffs could also backfire. Other countries could put their own levies on U.S. movies. That could hurt global ticket sales. Most studio revenue is now international, Axios noted.
The industry says it prefers a carrot instead of a stick: America could lure back moviemakers with its own tax credits. This is the approach that California’s governor, Gavin Newsom, backed on Monday when he called on Trump to support a $7.5 billion federal tax break for films made in America.
But that would cost money at a time when Congress is already struggling to find ways to pay for tax cuts the president wants. So Trump once again invoked tariffs as his favored fix.