President Trump on Monday pledged to impose the 100% tariff on foreign-made movies he first promised in May, saying the film business had been "stolen" from the U.S.
Why it matters: Such a levy could cause massive disruption to the entertainment industry, given the volume of media produced outside the U.S.
- It's not clear when or how the tariff would be levied, and whether the burden would be on the producers, distributors or somewhere in between.
- While Trump said the tariff would apply to "any and all movies that are made outside of the United States," it's not clear how much work on a film would deem it to be foreign made.
The big picture: Many Hollywood films are at least partially shot or edited overseas.
- Countries like the U.K., Canada and others often offer tax breaks and other incentives to lure Hollywood production to their shores.
- In July, Gov. Gavin Newsom doubled the funding for California's film and television tax credit program in a bid to keep more production in state.
Zoom in: While details on the looming movie tariffs are limited, two possibilities would be to calculate tariffs based off box office sales or production budget.
- If the tariff is based off total box office sales, many soon-to-be released films would have "virtually no chance of turning a profit," according to a July analysis by Jacob Jensen, trade policy analyst at the American Action Forum.
- Even if it were based off profits, the tariff would likely lead to higher ticket costs, licensing fees and at-home sales, Jensen noted.
- A tariff on production costs would have a more limited impact, especially if it only applies to the portion that was spent outside the U.S., but would still likely lead to higher ticket prices.
What to watch: Tariffing foreign-made films risks triggering retaliatory actions on U.S. films.
- The U.S. has historically been the largest exporter of films globally, and American movie studios generally derive most of their box office sales from overseas.
Editor's note: This story has been updated with new details throughout.
