Industry Reaction to Trump’s Proposed 100% Tariff on Foreign Films

Shares of major entertainment companies, including Disney, Netflix, Warner Bros. Discovery, and Paramount Global, experienced significant declines on Monday as investors reacted to President Trump’s recent announcement regarding tariffs.

Market Impact

As trading commenced on Monday, the U.S. stock market saw sharp declines in the stocks of those companies, with Netflix falling by 3.3%, Disney by 2.4%, Warner Bros. Discovery by 4.2%, and Paramount by 2.2%. Additionally, Lionsgate Studios saw a drop exceeding 7%. These declines contrasted with the broader market indexes, such as the S&P 500 (-0.70%) and the Nasdaq Composite (-0.82%).

Tariff Announcement Details

On his social media platform Truth Social, Trump claimed that foreign nations are using various incentives to lure filmmakers and studios away from the U.S., which he considers a national security threat. He stated that he would instruct the Commerce Department and the U.S. Trade Representative to initiate a 100% tariff on all foreign-produced films entering the United States.

Uncertainty Surrounding Tariff Implementation

As experts assess the implications of Trump’s tariff plans, there remains uncertainty regarding which films would be impacted. For instance, the upcoming release “Mission: Impossible – The Final Reckoning,” mainly filmed in the U.K., raises questions about whether it would incur additional tariffs.

Many films today are produced across several countries, complicating the definition of what constitutes a foreign-produced film. Additionally, it is unclear if television productions would be subject to similar tariffs.

Context of Tariff Discussions

Previously, when Trump introduced a broad initiative for “reciprocal” tariffs in early April, analysts noted that Hollywood might not be directly affected, as past tariffs primarily targeted physical goods. However, the potential for these new tariffs on films introduces significant financial implications for the entertainment industry.

Impact on Hollywood

Notably, Mel Gibson, among three Hollywood special ambassadors appointed by Trump, is planning to film the sequel to “Passion of the Christ” in Italy, highlighting the international nature of film production.

Economic Significance

According to the Motion Picture Association, the U.S. film industry generated $22.6 billion in exports in 2023, resulting in a trade surplus of $15.3 billion. Hollywood has maintained a positive balance of trade with major foreign markets, indicating its pivotal role in the U.S. economy.