As TV and film production in Georgia and the U.S. at large remains deflated, President Donald Trump said he is directing his administration to impose a 100% tariff on movies produced in foreign countries.
The measure, announced on his Truth Social platform late Sunday, seems to be an effort to lure filmmakers and production back to the U.S. from countries offering incentives more competitive than major American film hubs. This includes Georgia, which offers the most generous credit in the U.S.
In his Truth Social post, Trump said, “Hollywood, and many other areas within the U.S.A., are being devastated.” He called other countries offering bigger incentives and drawing business from the U.S. a national security threat.
Credit: Netflix, AP, Fox 2000
Credit: Netflix, AP, Fox 2000
In January, Trump appointed three “special ambassadors” to Hollywood — Jon Voight, Sylvester Stallone and Mel Gibson — for the purpose of bringing production back to the U.S.
Shares in Warner Bros. Discovery, Netflix and Paramount were down 1.5% or more Monday.
It would presumably apply to films made by U.S. companies that shoot overseas, not just ones made overseas by foreign studios.
Credit: AP
Credit: AP
The measure, however, is vague, with no clear explanation of how, when or where these tariffs will apply. It comes with more questions than answers, and has the potential to further disrupt an industry trying to regain its footing in a period of belt-tightening.
Why is Trump pushing for this?
Over the last few years, film and television production has been on the decline after inflating to near-record peaks.
Shortly before and after the pandemic, studios and streamers greenlit projects left and right to build out their content libraries. (“Welcome to Netflix. You’re greenlit,” was a running joke in the industry.) Interest rates were low and money was flowing. Georgia was a hot spot for production, especially big-budget tentpole projects. To meet the demand, developers built millions of square feet of new soundstages and both talent and skilled crew members moved from California, New York and other film markets.
Credit: RODNEY HO/rho@ajc.com
Credit: RODNEY HO/rho@ajc.com
But what goes up must come down. Wall Street began asking for returns on their investment in streaming platforms. Interest rates went up. Actors and writers went on strike, shutting down production for months.
Looking for ways to cut costs, producers looked toward shooting in other countries for better incentives and cheaper labor. Many of the highest-grossing films at the box office from the past year filmed overseas, including Warner Bros.’ “A Minecraft Movie,” Disney’s “Mufasa: The Lion King” and Universal’s “Wicked.”
Now, thousands of people are out of work across the country, forced to live off savings, withdraw from their union retirement accounts or leave the industry entirely to make ends meet.
How would the tariffs work?
That is unclear. Trump’s tariffs so far have been primarily focused on goods, not services, and entertainment products like movies are considered services. Tariffs are applied at the point of import, but productions filmed overseas aren’t “imported” into the U.S. At least they haven’t been in the past.
Services are difficult to assess because they don’t have set prices, said Tibor Besedes, a professor of economics at Georgia Tech. Back in the day, movie theaters were sent physical rolls of film in a canister. Now, they’re digital files.
“Take the latest ‘Mission Impossible,’ what’s the value of that movie?” Besedes said. “Are we going to assess this based on the cost of production? Are you going to assess it based on however many people see it, or the price of movie theater tickets, the revenue that it generates? Thinking through the mechanics of how you asses the tariff, it gets complicated.”
And how would the government tax movies that are only on streaming services?
What counts as a foreign-made film?
Also unclear.
It’s typical for one production to complete work across multiple locations. The casting and scriptwriting process can take place in Los Angeles, shooting can occur in Hungary, audio-dubbing can be completed in Atlanta and postproduction can be sent to a studio in Canada.
“Avengers: Endgame,” the 2019 Marvel smash, shot many scenes in the Atlanta area as well as in California. Others were shot in the United Kingdom.
It’s a standard practice for individual productions to establish a limited liability company to handle expenses and take advantage of local tax incentives. It’s possible these LLCs can be targeted, and if they were identified as using foreign tax incentives, then U.S. authorities could apply the tariff to them, said Ethan Tussey, a professor and associate dean at Georgia State University. But the LLCs don‘t have trade agreements with the U.S. and don’t import productions into the country. They are merely limited financial arrangements for the shoot.
Is this what the industry wants?
Again, unclear. It’s certainly not what lawmakers, entertainment unions and activists have been calling for. There has been a big effort to introduce a labor-based federal tax incentive, which the U.S. does not have, to compete with foreign countries. California proposed boosting its tax credit to 35%, up from 20% to 25%, and doubling the cap that limits how much California provides each year.
In a statement issued Monday, the International Alliance of Theatrical Stage Employees, the union representing crew members, said it was with the Trump administration and Congress to advocate for policies that result in restoring U.S. film and television jobs, while not disadvantaging Canadian members or harming the industry overall. It said it recommended the administration implement a federal film production tax incentive and other domestic tax provisions.
“We await further information on the administration’s proposed tariff plan, but we continue to stand firm in our conviction that any eventual trade policy must do no harm to our Canadian members — nor the industry overall,” said IATSE President Matthew D. Loeb in the statement. “We seek reciprocal trade practices that ensure fair competition for all IATSE members.”
Credit: AP
Credit: AP
If there is a way to implement these tariffs, doing anything that will diminish the global box office will send a ripple through the industry that would require studios to rethink budgets, production slates and distribution strategies, said Kate Fortmueller, an associate professor in Georgia State’s School of Film, Media and Theatre.
Foreign governments might also try to retaliate.
Depressing sales for Hollywood would likely reduce output of film, the exact opposite of what Trump wants to do.
Hollywood has always been global. There is global competition through tax incentives that keep costs down, and global audiences for film and television that keep revenue high.
The American movie industry produced $22.6 billion in exports and had a $15.3 billion trade surplus in 2023, according to an economic impact report from the Motion Picture Association. It also generated a positive balance of trade with every major market.
“If the logic here is that there was some kind of idyllic time when Hollywood was untouched by global influence, that is a misrepresentation of its history,” Fortmueller said.
Have other countries imposed measures to protect their local film industries?
To assess a tariff, you have to have something that is countable, Besedes said. Unlike a car or computer, movies — at least ones not in BluRay form — are fundamentally not countable. So usually limitations are imposed through quotas.
Both China and France have quotas on the number of Hollywood productions they show each year. China, the world’s second-largest film market, currently imports 34 Hollywood films a year. France has a 1:7 policy — for every seven foreign films they import, one French film must be produced and shown in French theaters.
Last month, the China Film Administration said it was reducing its quota of American films allowed into the country after Trump escalated tariffs on Chinese goods.
The U.S. has never had a quota on imported films because its domestic market already favors American-made films. The U.S. exports far more films than it imports — foreign films only make up a slim share of features at the box office every year.
What are leaders in Georgia saying?
Gov. Brian Kemp’s office said it was “aware of the social media post and will monitor for specifics.” The Georgia Screen Entertainment Coalition, an arm of the Georgia Chamber, declined to comment. And California Gov. Gavin Newsom, whose office is leading the charge on lifting the state’s incentive cap, has yet to comment.
Atlanta arts and entertainment attorney Beth Moore said Trump is “once again demonstrating that he only has one pithy tool in his tiny toolbox, and his haphazard use of tariffs is wreaking havoc on the entire economy, including now in entertainment.”
She noted that film and TV was always a risky investment but with current “widespread economic uncertainty caused by the Trump administration, even fewer people are willing to be big on novel ideas and big budget productions out of fear of financial devastation.”
Tussey said the politics of this measure are pretty good. The runaway productions negatively effect union workers in California and in Georgia, with the former still trying to recover from the wildfires.
“I don’t think tariffs solve it, or at least I can’t see how, but that seems to be Trump’s favorite cudgel,” Tussey said.
— Staff writer Rodney Ho contributed to this report.
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