Donald Trump’s arbitrary proposal to levy a 100 per cent tariff on films made outside the United States may be his latest weapon in the international trade wars since he took office, but it is poorly designed and inefficiently aimed.
It will – if it can ever be made workable – also do grievous damage to the economies of America’s allies and to the American entertainment sector. It will not, in other words, “make Hollywood great again” but lay waste to the thriving and symbiotic film production sectors in other nations.
In the case of the UK, it carries the additional danger that it will badly diminish British leadership in the sector and its “soft power” abroad, sometimes delivered by films portraying heroic Britons.
The James Bond franchise is the prime example of this phenomenon, with its future already cast into some doubt after the film rights to the character were sold by the Broccoli family to Amazon MGM Studios. With creative control having already passed to this American-based entertainment giant, and with the tariff likely to curtail UK-based production, there may soon be very little “British” about Bond in reality. Much the same will probably go for Harry Potter and other successful British “brands” (for want of a better term).
The damage goes deeper than matters of national amour-propre, though. Some of the most “American” of American movies are filmed in the UK, undergo post-production here, or star British artists, and the loss of work as a result of these random and unjustified tariffs would be devastating.
Taking into account similar income from television, the UK earns around £5.6bn from this arm of its creative industries, with as many as 300,000 people dependent on it. Experts in the industry say that the Trump film tariff could wipe out the British sector.
Given that the US-derived activity is such a large and regular source of revenues, the knock-on effects in the rest of a shrinking sector, no longer enjoying critical mass, would be even graver. It would also affect the economy more widely, including the public finances. Taken together with the punitive tariffs on steel, aluminium and cars, and the additional 10 per cent general tariff, this is beginning to feel like a more brutal trade war than anything since at least the 1930s.
Grim as things are, they could deteriorate further for all sides. This foray into the service sector marks a departure in President Trump’s trade policy, where previously tariffs were confined to manufacturers. This is obviously of acute concern to Britain, which enjoys a healthy surplus with the US in areas such as finance (about £75bn a year); but the American economy is similarly far more dependent on services than goods to make its living in the world.
The United States is thus much more vulnerable to retaliatory tariffs or other obstacles imposed by other countries hit by the movie tax. India, for example, is a hugely lucrative potential market for the US service sector – but not if the Trump film tariff hurts Indian film sales in America.
The broader danger is that Mr Trump’s tariff mania will spread across every sector of the world economy, with even more devastating effects – including for American businesses and consumers.
Rumours suggest that the UK’s trade talks with the US are proceeding at some pace, albeit the UK-India deal has been even more rapidly concluded after years of gestation. Sir Keir Starmer and his negotiating team will need to restrain themselves from escalating this dispute, and to use all the means at their disposal to protect some of the UK’s most precious economic, cultural and “soft power” assets.
At this delicate juncture in the transatlantic trade talks, Sir Keir still needs to be more of a Cool Hand Luke than Raging Bull.
