Tariffs and Tinseltown

May 4th was a special day for Hollywood, and not just because it was Star Wars day. In the evening, President Donald Trump decided to expand his global trade war by adding internationally-produced movies to the list of imports he wants to tariff. On Truth Social, President Trump proclaimed that “the movie industry in America is DYING a very fast death” as “other countries [offer] all sorts of incentives to draw our filmmakers and studios away from the United States.” 

President Trump ordered the United States Trade Representative and the Department of Commerce to institute a 100% tariff “on any and all movies coming into our country that are produced in foreign lands.” White House Deputy Press Secretary Kush Desai later backtracked on these comments, saying they were just one of the potential “options to deliver on President Trump’s directive to safeguard our country’s national and economic security while Making Hollywood Great Again.”

Nevertheless, the threat of a 100% tariff on movies filmed internationally sent studio executives into a panic. Many tentpole productions are shot abroad, and with box office numbers already soft, the potential cost increase was alarming. Before Desai’s clarifying remarks on May 5th—and even to a lesser extent afterward—studios were in full crisis mode. 

Take Paramount’s Mission Impossible: The Final Reckoning, for example. This movie is set to premiere on May 23, 2025, and is reported to have cost $400 million to produce. However, a combination of the globe-trotting nature of the franchise and the tax incentives to shoot mostly in England resulted in this being an entirely internationally-made film. 

If the 100% tariff were to go into effect, that would bring the total cost up to $800 million. That figure would make it “mission impossible” for the movie to become profitable, as it would require something in the neighborhood of $1.8 billion total gross just to break even (assuming a modest $100 million marketing budget and the standard theatrical revenue sharing percentages). For references, the previous Mission Impossible entry only grossed $570 million in 2023! 

Mission Impossible is just one example. Given the financial incentives provided by the governments of the United Kingdom, Canada, Hungary, Australia, and New Zealand, many popular movies are shot overseas to receive up to a 30% tax rebate. Deadpool & Wolverine, Dune: Part 2, and A Minecraft Movie were shot in London, Budapest, and New Zealand, respectively. Disney just began shooting the highly-anticipated Avengers: Doomsday in London and is planning to remain there for the production into Avengers: Secret Wars in late 2025 as well.

Panic also arose given the vagueness surrounding these tariffs. Do all parts of the film have to be shot in America? Even location shooting? What about international post-production houses that create visual effects? How does one even “tariff” a piece of intellectual property like a movie? For Jay Sures, the Vice Chairman of United Talent Agency, “in its current form, the tariff doesn’t make sense.” While Mr. Trump did not address these questions in his May 5th press conference, he did promise to meet with the studios “to make sure they’re happy with it…because we’re all about jobs.”

 Mr. Trump has always had a fascination with Hollywood. Well-sourced Trump reporter Mark Halperin says Donald Trump sees his life as being a montage of cinematic moments, where he is both the star of the show and master producer. In fact, when discussing his plan to reopen the Alcatraz Prison (which was on the same day as his Hollywood tariff discussions), he said  "I was supposed to be a moviemaker. We started with the moviemaking [tariffs] and we’ll end with the [moviemaking]. It represents something very strong, very powerful in terms of law and order...Alcatraz is, I would say, the ultimate. …[Escape from] Alcatraz, right? The movies."

One possible reason for these movie tariffs threats is simply to get more appreciation and lip service from the folks in Tinseltown. I’m sure Trump would love to have Bob Iger and Tom Cruise in the Oval Office telling him how amazing his plans for more domestic film production are in an attempt to get a tariff pause. In fact, he ran this exact play just last month when he had the CEOs of Home Depot and Walmart bend the knee to get a tariff reprieve. 

This hypothetical might even be more tantalizing for President Trump, given that he has a perpetual desire to win over the people who profess to hate him, such as Hollywood liberal elites. He demonstrates this compulsion when he tries to charm liberal reporters in private meetings. In the past year, President Trump met with Jeffery Goldberg, Bill Maher, Joe Scarborough, and Mika Brzezinski behind closed doors and received a positive reception from all of them. It stands to reason that the same principle would apply to his relationship with Hollywood execs.

In theory, the principal reason for the tariff threat is to function as a stick to the carrot of newly-created tax incentives for the film industry that the Trump Administration is rumoured to announce. This comes after a meeting with Jon Voight, one of President Trump’s “Ambassadors to Hollywood,” who recommended the proposal. If enacted, these changes would be welcomed by those in Tinseltown, as many believe that the Golden State has taken Hollywood for granted. 

Prolific actor and director Ben Affleck feels that California doesn’t understand as much as other places how beneficial the film industry can be for their economy. As a result they’ve allowed themselves to be uncompetitive when it comes to their exchange rate and tax rebate deals. He acknowledged that while Governor Gavin Newsom doubled the total cap for rebates, the tax rebate percentage itself is far below that of England’s.

When done properly, these tax incentives can create a vibrant film industry in only a decade. The perfect case study for this is in Atlanta, where powerful government incentive programs have resulted in nearly every Marvel film since Ant-Man to be filmed, at least in some part, on one of the soundstages located on Trillith Studios’ 700 acre lot. 

Many more production companies have followed Disney’s lead. However, just as liberal bastions such as California can lose appreciation for the role of film production in their local economies, conservatives in Georgia can lose sight of this reality. In 2024, Rep. Marjorie Taylor Greene (R-GA) floated removing her state’s tax credits, which have driven major productions to shoot in the Atlanta area: “Most Georgian’s [sic] resent Republicans in our state for inviting the nasty commies from California, the Hollywood elites, into our state by dishing out Hollywood tax credits. We in Georgia are fed up with disgusting Hollywood and their disgusting values and elite judgement in our state that is trying to turn GA blue!” 

Much to Representative Greene’s dismay, the initiative to cut back on film tax credits and cap the total amount eligible was eventually dropped by the state legislature and is why recent movies like Superman are still shot in Atlanta’s Trilith Studios.

While establishing a better tax rebate program will address one of the reasons studios go overseas for their productions, other deregulation must occur as well. On American film sets, strong union presence from the International Alliance of Theatrical Stage Employees (IATSE) makes having longer filming days harder and production rules stricter. 

In the UK, for example, productions can easily go into overtime so long as the crew gives their “consent”, which they virtually always do. Unless the Trump administration is seeking to battle IATSE, there will still be important reasons why studios go to the equally well-equipped soundstages of England with their equally talented repository of artists, technicians, and crew.

For years we have seen production move out of America––the birthplace of the motion picture industry––and with it, many great American filmmakers and below-the-line talent have left in search of better production opportunities. This is an artistic and technical brain drain, and the Trump Administration has clearly identified this as a major issue that needs to be addressed should America hope to keep the “soft power” potential of Hollywood at its maximum power. 

So, while there will always be criticism from the peanut gallery, President Trump is actually taking action. We will have to see how these tariff battles play out, but if the plan to “Make Hollywood Great Again” is successful, it's possible that Donald Trump will get his star on the Hollywood Walk of Fame installed once more.