Lights, camera, and tariffs! On part of his tariff binge, President Trump has announced a new proposed tariff: a 100 percent tariff on any movies produced in foreign countries that come into the United States. According to Trump's post on Truth Social, the American movie industry is dying. Per Trump's argument, this has become a national security threat because other countries are offering incentives to produce movies. He then ended with "WE WANT MOVIES MADE IN AMERICA, AGAIN!" Where to begin?
One is that the U.S. movie industry is not dying. Using the country of origin data from Internet Movie Database, blogger Stephen Fellows found that about one third of movies produced since 2000 can be classified as originating from the United States. Being the industry leader in a growing market is not exactly a coup to Hollywood.
Similar to Trump's logic on auto tariffs, Trump does not understand that supply chains in the 21st century are complex and multinational. Goods and services these days are most often a mix between domestic and foreign inputs. Films do not have a single location; they typically have multiple countries of origin. United Kingdom and Canada are the top foreign locations for U.S. studios, with 23.9 percent and 19.4 percent of films, respectively, being shot in those locations.
I would love see the Trump administration try to argue with a straight face that German rom-coms, telenovelas, Amélie, or the latest Bollywood smash hit is a national security threat. I cannot wait to read the report on that investigation!
Then there is the matter of implementing the tariff. Trump's other tariffs have been levied on goods. Movies are an entertainment service. There has not been a moment when tariffs were levied on services. At what point would the government tax the movie? At movie tickets? Would there be a tax on Amazon, Netflix, and other streaming services? Would it be paid by the studio, the producers, or distributors? Plus, how can you assess the value of the movie without knowing how popular it would be or how many views it would create? Streamed services are intangible, which means they would be governed by royalty taxes, not tariffs. Even if you tried to implement a tariff, it would require "customs officers inspecting data or monitoring IP packets at ISPs." Good luck with that!
As is the case with other tariffs, that means fewer imports. As Reason Magazine rightly points out, this would not only be a barrier to goods, but ideas. Forget for a moment that the International Emergency Economic Powers Act explicitly protects "informational materials" such as film as an exemption to regulate or prohibit under a national emergency. Opening Hollywood and other U.S. film producers to competition means greater film quality and appealing to the wide variety of tastes and preferences in film. Since tariffs constrict supply, this would also make it more difficult for domestic independent producers to access financing. This would also have an impact of variety of films.
With increased production costs induced by the tariffs, domestic producers will most likely play it safe and take fewer risks. It would hit domestic film producers in terms of financial losses. Furthermore, Trump's tariff would translate into fewer incentives to innovate, be efficient, and satisfy customers, which makes sense because that is what happened when the United Kingdom (Cinematograph Act of 1927) and Canada implemented quota laws analogous to Trump's proposal.
As the Foundation for Economic Education illustrates, "Great cinema is born from talent, innovation, and competition." If Trump actually wants to make the American film industry stronger, he needs to make it more competitive, not stifle it with protectionism. All Trump's film tariff will do is incentivize Hollywood producers to make derivative dribble instead of making American film great again.
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