 "Trump's 100% tariff on foreign films: What does this mean for Hollywood? Will Indian cinema be hit?")
It’s been over 100 days that Donald Trump has been at the helm of affairs. Ask people what they think of his term so far and some would say it’s been chaotic. Others would say it has been theatrical.
On Sunday night (May 4), he made it even more dramatic as he extended his trade war to the cinema. On Truth Social, the US president announced a 100 per cent tariff on “all movies coming into our country that are produced in foreign lands”.
The announcement has led many to react with a big ‘huh’ as details on this plan remains short on details. In fact, it’s causing a lot of confusion and questions, including will this be a huge hit for Hollywood or would this be a box office disaster.
As people try to unpack the news, we take a look at the issue and try to clear the doubts that have arisen so far.
What is Trump’s tariff on movies?
On Sunday, US President Donald Trump wrote on his social media platform that he was “authorising” the Commerce Department and US Trade Representative to place a 100 per cent tariff on films that are produced outside the United States and imported into America.
In his message, Trump wrote, “The movie industry in America is dying a very fast death. Other countries are offering all sorts of incentives to draw our filmmakers and studios away from the United States. Hollywood, and many other areas within the USA, are being devastated.
“This is a concerted effort by other nations and, therefore, a national security threat. It is, in addition to everything else, messaging and propaganda! Therefore, I am authorising the Department of Commerce, and the United States Trade Representative, to immediately begin the process of instituting a 100 per cent tariff on any and all movies coming into our country that are produced in foreign lands.
“We want movies made in America, Again!”
Reacting to the post, Commerce Secretary Howard Lutnick said on X: “We’re on it.”
Can Trump levy such a tariff though?
Following Trump’s big announcement, the biggest question that everyone was asking is can the US president actually do this and if yes, how would it even work. That’s because as with the US president’s most announcements, it was scant on details and most were unclear on what he meant by it. Even Lutnick did not provide any details on the implementation.
Moreover, movies are intellectual property and not physical goods that move through ports like most items subject to tariffs. The Trump administration would need to determine how to value a movie in order to apply the tariffs, as well as what the threshold would be to classify it as an import.
However, CNN reported that the USTR notes that some services can be subject to certain non-tariff trade barriers, such as regulations and tax incentives.
Questions also arise on how such a tariff would work. Moviemaking is a highly internationalised process —some films are partly shot in the US, some are completely shot abroad but are actually American productions. For instance, Mission: Impossible – The Final Reckoning opens in US theatres on May 23. It was filmed primarily in the UK. Is it subject to a tariff?
As Variety noted in its report, figuring out where to intervene in the value chain would be a challenge.
Also, it’s not clear if tariffs would apply to TV shows made overseas for international audiences but available in the US.
What’s behind Trump’s move?
No one can say for sure determine the reasoning behind Trump’s 100 per cent tariffs on movies. However, it could be pertaining to the fact that an increasing number of American productions are shooting their films out of the country.
For instance, this year’s Hollywood’s highest-grossing film, A Minecraft Movie was shot primarily in New Zealand. Moreover, Upcoming releases such as Walt Disney Co’s The Fantastic Four: First Steps, was shot largely in the UK and Spain, and Universal Pictures’ Jurassic World Rebirth, was filmed in Thailand, the UK, Malta and the US.
Several recent major movies produced by US studios were also shot outside America, including Deadpool & Wolverine, Wicked and Gladiator II.
Furthermore, many foreign cities have offered large tax breaks to film and televisions studios to shoot movies and shows outside of Hollywood. That has led to a large number of productions to shift operations to places like Toronto and Dublin.
As a result, thousands of middle-class film workers in the United States — camera operators, set decorators, lighting technicians, makeup artists, caterers, electricians — have seen work evaporate. According to the International Alliance of Theatrical Stage Employees, roughly 18,000 full-time jobs have been eliminated in the past three years, primarily in California.
But would a 100 per cent tariff hurt or help Hollywood?
The answer isn’t clear on this, but, going by Trump it will help or incentivise production houses to shoot in America.
While this may sound great, it’s not that simple. Shooting within the US is more expensive, notes American production houses, increasing the overall cost of the movie. This, in turn, would mean they would have to sell it to distributors at a higher price. If purchased, they would sell it more exorbitantly in theatres — meaning the customer would land up paying more for a movie ticket.
And that’s the last thing Hollywood requires right now. The theatre business is already struggling to return to pre-pandemic levels. In 2018, the US box office recorded just under $12 billion. This nosdived to just over $2 billion in 2020 amid the Covid-19 pandemic. And while they have rebounded in the years since the pandemic, they haven’t eclipsed $9 billion.
Also, former senior commerce department official William Reinsch, a senior fellow with the Center for Strategic and International Studies, told The Guardian that retaliation against Trump’s foreign movies tariffs would be devastating. “The retaliation will kill our industry. We have a lot more to lose than to gain,” he said.
Will Trump’s tariffs hurt Indian movies?
If levied, these tariffs are bound to hurt the Indian film industry. How?
Most Indian movies are not shot in the US and hence, would invite a 100 per cent tariff. This would be devastating to the Indian film industry. In simple terms, if a distributor in the US buys an Indian film for $1 million, they would now have to pay an additional 100 per cent tax on that amount. This means the cost to screen the film doubles to $2 million. For US distributors, this makes the entire model financially disastrous.
For example, in 2022, RRR, directed by Rajamouli, became a smash hit in the US, grossing $65 million in its opening weekend. Since then, the movie now grossed over $14 million at the American box office. Now, imagine if such a movie was taxed, it would be disastrous.
In fact, filmmaker Vivek Agnihotri has already stated that Trump’s move would be disastrous and that “if this absurdity prevails, India’s struggling film industry will collapse entirely, with no one to save it.”
As NDTV reported, movies such as Kill, Salaar and other upcoming releases now face uncertainty regarding their distribution fate in North America.
With inputs from agencies
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