As President Donald Trump seeks to impose a 100% tariff on films produced outside the United States, investors of movie production studios are getting jittery.
Share prices of major studios and streaming companies slid following the news, with Netflix shares trading down 1.5% midday on Monday, and Paramount shares dipping about 0.7%. Disney and Universal parent Comcast slumped in pre-market trading Monday before mostly bouncing back to their respective prices at Friday’s close.
Trump said in a Sunday social media post he plans to implement taxes on foreign films as a means to prevent the U.S. movie industry from “dying a very fast death.”
“Other Countries are offering all sorts of incentives to draw our filmmakers and studios away from the United States,” he said. “Hollywood, and many other areas within the U.S.A., are being devastated. This is a concerted effort by other Nations and, therefore, a National Security threat.”
White House spokesperson Kush Desai said in a statement to Fortune there have been no final decisions on foreign film tariffs.
“The Administration is exploring all options to deliver on President Trump’s directive to safeguard our country’s national and economic security while Making Hollywood Great Again,” Desai said.
U.S. studios have increasingly turned to shooting projects overseas as a means of taking advantage of tax benefits or finding unique locations for films for television sets. Netflix announced in February plans to invest $1 billion to produce films and series in Mexico over the next four years.
According to a report from entertainment industry consultancy Olsberg SPI, 36 European countries and 15 Asian countries offered film production incentives in 2024, up from 17 European and seven Asian countries offering the tax credits and rebates in 2017.
Analysts warn of tariffs' consequences
While Trump suggested the foreign-film tariff would provide a boost to U.S. filmmakers and studios, analysts warn the move could have the opposite intended effect, resulting in increased production costs that would cause studios to have to make tough decisions.
“100% tariffs on some or all of the cost of a film…would lead to fewer films, more expensive films, and lower earnings for all in the business,” Benjamin Swinburne, analyst and head of U.S. Media Research at Morgan Stanley, wrote in a Monday note to investors. “The reality is that for any given film, there can be writing, production, editing, post-production, visual effects—all done in different countries.”
In 2023, U.S. films brought $22.6 billion in exports and contributed to a $15.3 billion trade surplus for the industry, according to data from the Motion Picture Association.
Information about what Trump’s proposed levy would include is sparse, leading Swinburne to raise questions about which projects—such as in-progress or recently completed shoots—would be impacted, and if the tariff move sets up a path for overseas television shoots to also be taxed.
Most concerning to him is the potential risk of countries imposing retaliatory tariffs on U.S. projects, or potentially blocking American releases.
“Will foreign governments respond by blocking the export of U.S. content, through theatrical or streaming or both?” Swinburne said in his note. “This is perhaps the biggest risk, raising the potential for U.S. streaming services to be taxed at materially higher rates or even reducing the reach of Hollywood content.”
This story was originally featured on Fortune.com
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