President Donald Trump declared on Truth Social Sunday night that the American movie industry is in rapid decline. He claimed other nations are incentivizing filmmakers and studios to leave the U.S., devastating Hollywood and other areas. He considers this a National Security threat due to messaging and propaganda. Trump announced he is authorizing the Department of Commerce and the U.S. Trade Representative to begin imposing a 100% tariff on all foreign-produced movies, aiming to bring film production back to America.
Commerce Secretary Howard Lutnick confirmed they are working on it.
However, experts have told TIME that the implementation and the target of such a tariff remain unclear.
Entertainment consultant Kathryn Arnold says that while understanding movie production isn’t the government’s job, the interconnectedness of the global film market makes this policy devastating and illogical.
While the President correctly identifies the problem of declining U.S. film production due to overseas relocation, experts believe tariffs are not the right solution.
Trump’s previous trade wars involved tariffs on imported foreign goods. However, foreign films are intellectual property within the global trade of services, where the U.S. holds a net-exporter position.
Tom Nunan from UCLA suggests the administration believes that making foreign manufacturing less appealing will improve domestic manufacturing across industries, including entertainment. Tariffs on foreign goods are intended to inspire domestic production.
Nunan explains that the administration’s operating theory is that making it cost-prohibitive to produce or acquire motion pictures and television from foreign territories will cause production to return to the U.S. However, he admits the situation is more complex.
Speaking to reporters, Trump stated that other nations have been stealing moviemaking capabilities from the U.S. He said he has conducted thorough research and believes Hollywood is being destroyed, suggesting tariffs on imported movies if they are not made in the United States.
While Hollywood has experienced a production decline partially due to rising labor costs, Arnold suggests that Trump could reverse this trend by offering incentives for shooting in the U.S., similar to those offered by foreign countries and some U.S. states. However, this would only affect one aspect of filmmaking, and many films involve multiple locations and co-production across countries.
Incentivizing specific aspects of production would be more straightforward than determining a film’s nationality for penalty purposes.
The Office of the U.S. Trade Representative notes that while services are not typically subject to tariffs, they can face trade barriers like regulatory requirements. Restricting film and entertainment can significantly reduce media freedom.
In China, foreign films (those not produced by domestically licensed companies with less than 49% foreign ownership) face strict censorship and quotas through state-run distributors. In response to Trump’s tariffs, China threatened to reduce the quota of U.S. movies allowed into its market.
There is also a risk of retaliation from other countries. According to the Motion Picture Association’s 2023 economic impact report, the film industry is one of America’s strongest service-sector exports, generating a positive trade balance in every major market. William Reinsch from the Center for Strategic and International Studies told Reuters that the U.S. has more to lose than gain.
