U.S. President Donald Trump said on Monday he would impose a 100 percent tariff on all films produced overseas and then sent to the U.S., repeating a threat made in May that would upend Hollywood's global business model.
"Our movie making business has been stolen from the United States of America, by other Countries, just like stealing candy from a baby," Trump said in a post on his Truth Social.
However, it was not immediately clear what legal authority Trump would use to impose a 100 percent tariff on foreign-made films.
"There is too much uncertainty, and this latest move raises more questions than answers," said PP Foresight analyst Paolo Pescatore.
"For now, as things stand, costs are likely to increase, and this will inevitably be passed on to consumers," he said.
The president had first floated the idea of a movie tariff in May but offered few details, leaving entertainment executives unsure whether it would apply to specific countries or all imports.
Many industry insiders have said that it's unrealistic to make movies totally in the U.S. given that modern films often use production, financing, post-production and visual effects spread across multiple countries. They also expressed concern over possible retaliatory measures by other countries.
Meanwhile, industry executives warn that a broad tariff could affect thousands of U.S. workers employed on overseas shoots, from visual effects artists to production crews, whose work is often coordinated across multiple countries.
Film producer Mark Wolradian noted that the film industry is different from traditional manufacturing, and production teams often choose overseas locations because the subject matter requires it. "A blanket requirement for domestic production is unrealistic, because in our storytelling, cross-border filming is an essential part of the creative process," he said.
He also pointed out that U.S. film production capacity is limited, a fact many people are unaware of. For example, Atlanta can only host three film crews at a time, which means roughly six movies a year. Given the huge production demand from major studios, domestic resources alone cannot meet this need, Wolradian added.
"We would prefer to see incentive measures that encourage producers to make full use of existing U.S. facilities and prioritize domestic filming, rather than punishing projects that must shoot abroad for narrative reasons, or teams forced overseas due to capacity constraints," Wolradian said.
After the announcement in May, a coalition of American film unions and guilds sent a letter to Trump, urging him to support tax incentives for domestic film production in a reconciliation package being drafted in Congress, aiming to help return more movie and television projects to the U.S.
German film director and producer Jan Schutte also noted that production costs in Los Angeles are extremely high, which is why many studios have already relocated to more affordable places, such as Atlanta, Georgia, Santa Fe and Albuquerque, New Mexico, and other U.S. locations.
The U.S. film industry recorded a $15.3 billion trade surplus in 2023, backed by $22.6 billion in exports to international markets, according to the Motion Picture Association.
Hollywood has increasingly relied on overseas production hubs, such as Canada, the UK and Australia, where tax incentives have attracted big-budget shoots for films ranging from superhero blockbusters to streaming dramas.
At the same time, co-productions with foreign studios have become more common, particularly in Asia and Europe, where local partners provide financing, access to markets, and distribution networks.
According to Fortune magazine, Benjamin Swinburne, head of U.S. media research at Morgan Stanley, wrote in a May 5 report to investors that a 100 percent tariff on films would reduce the number of productions, drive up costs, and cut industry-wide revenues.
(With input from agencies)