President Donald Trump is taking aim at movies filmed overseas as the latest target for Trump tariffs, going so far as to call offshore-made U.S. films "a National Security threat" in a Sunday social media post. Shares of Netflix, Disney, Paramount and others fell early Monday, after Trump said his administration would begin the process of "instituting a 100% Tariff on any and all Movies coming into our Country."
In a Truth Social post, Trump highlighted the incentives offered to filmmakers and studios to induce them to film productions overseas. "This is a concerted effort by other Nations and, therefore, a National Security threat."
Trump: The Movie Industry Is 'Dying'
Trump contends that "The Movie Industry in America is DYING a very fast death."
The bigger picture shows that the movie industry provides an example of the benefits of trade. The Motion Picture Association says films and television accounted for $22.6 billion in exports in 2023, which was $15.3 billion more than U.S. spending on foreign productions.
Further, film and TV industry employment provided 856,000 direct jobs in 2023. However, that was down from 927,000 direct jobs in 2018, according to an earlier MPA report. It's not clear the extent to which the 2023 jobs data was reduced by industry strikes that curtailed productions for much of that year.
The Hollywood Reporter cited research from ProdPro showing that production spending in the U.S. fell to $14.54 billion last year, down 26% from 2022.
Trump Tariffs Threat Could Hit Netflix Earnings: Analyst
Citi reiterated a neutral rating for Netflix after the Trump tariffs threat, according to TheFly. The firm said a worst-case scenario could cut earnings by $6 per share, or 20%, though Netflix would have ways to make up the cost, including raising prices.
Morgan Stanley noted a potential for retaliatory tariffs, including a possibility of blocking U.S. film releases or streaming services. Barclays analyst Kannan Venkateshwar thinks the Trump proposal, if implemented, "may end up harming the very industry it is supposed to help."
Collecting Trump Tariffs On Movies
The industry is still trying to gauge the threat of a 100% tariff on movies coming into the U.S. How such a tax would work is far from clear. One possibility would be to impose a tax at movie theaters on films produced overseas. That would blow up the cost of tickets, crushing attendance. Cinemark and Imax are both falling about 5% on Monday, while AMC Entertainment is off 2%.
Presumably, a lot of low-budget movies that rely on inexpensive foreign production and crews to make them viable wouldn't get made under a Trump tariff regime.
Many productions are filmed in multiple locations, including a mix of foreign and domestic. That's a lot like auto manufacturing, which uses a combination of foreign and domestic parts. Tariffs might apply above a certain threshold of foreign production.
Alternatively, film distribution companies could pay a tax based on the cost of the distribution rights they pay for foreign-produced films. What about films or series produced in-house by Disney or Netflix? Applying a tariff on those would be more complicated, especially if they aren't released in a theater. The companies might face a tax on overseas production costs. Another option would be to charge a tariff based on the value of foreign production incentives the companies receive.
NFLX, DIS
Netflix was off 2% on Monday, but had cut most of its loss from early lows, suggesting some skepticism about Trump's tariff threat. The stock has climbed for 11 consecutive sessions, including a breakout from a double-bottom base.
Disney was off a fraction, after falling about 3% at the open.
Paramount Global fell 1% and Warner Bros. Discovery dropped 0.8%.
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