A 100% Film Tariff? The Uncertain Future of Global Movie Production

Whilst US studios have spent a significant amount overseas, speculation is rife in the film industry on how a tariff on foreign films would work.

Over the decades the film industry seems to leap from one crisis to another: advent of talkies, television, Video/DVD, Artificial Intelligence and so on and on. Whether there is a threat from the tariffs on overseas films, only time will tell. But, as of now there is a dark cloud hanging over the industry. Yes, another potential crisis looms.

President Trump first floated the idea of a tariff on foreign films in May, just before the Cannes Film Festival. Then on 29^th September he indicated on Truth Social that he was planning a 100% tariff on any and all movies made outside the United States. No further details have been released on what constates a movie and what makes it foreign. And how would you value a movie for the purpose of levying a tariff? One supposes that a 100% tariff on foreign movies could be a physical tariff on digital transmissions?

During a business session at the American Film Market last week, it was speculated that a tariff could be levied against the quantum of any foreign tax credit received. Of course, tariffs are straight forward when applied to imported goods which are enforced at the Border. The economic value of movies is tied up in intellectual property which effectively amounts to a flow of data.  Applying a tariff to this formula is not an easy task.

There’s no doubt that the US has lost a huge amount of production to overseas markets. In the past years Hollywood studios spent $41 billion on production, of which $24 billion was spent overseas. The largest beneficiary of overseas spent was the UK with $8.7billion followed by Canada with $6.4billion.

The key motivators for the exodus of investment from the US are: attractive tax credits, lower labour costs and world class sound stages. Whatever the future holds, the major studios in the UK such as Pinewood, Elstree and Leavesden are currently booked up for years in advance by US productions.

An example of what’s been happening to production locations is Marvel. They produced around two dozen superhero movies and TV shows in the Atlanta area to hyper fanfare about the area’s attraction. And yet now, they have relocated production to the UK.

Trump commented “our movie making business has been stolen from the United States of America, by other countries, just like stealing candy from a baby”

We’ll just have to wait to see what the future holds.

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