There is a new tariff in town. This time, it’s coming for movies produced overseas — even if they are made by Hollywood studios.
President Donald Trump announced a 100 percent tariff on all television and film produced outside the US on Sunday night.
He claimed the tariff is in response to Hollywood ‘DYING a very fast death.’
Consumers may face higher costs for streaming services due to the federal policy. These services have already been increasing prices and taking measures against password sharing, and this new policy could add to the expense.
Netflix is a great example. The streaming service’s biggest expense is production costs for its original programming.
Some of the services most-watched television and film programs are produced in foreign countries, including Squid Games, Weak Hero, and Under Paris.
As a result, the production costs for companies like Netflix could potentially double. This might lead to the companies passing on these costs to their customers through higher subscription fees or even halting the production of certain shows and movies.
But it’s impossible to know the knock-on impacts: the White House hasn’t revealed plans about how to value the films before the tariff is applied.
Ted Sarandos, the CEO of Netflix, recently said that his company was well positioned to handle the uncertainty in the rest of the economy
The White House’s spokesperson, Kush Desai, stated that while final decisions on foreign film tariffs are pending, the Administration is considering various options to fulfill President Trump’s goals of protecting the nation’s interests and revitalizing the entertainment industry.
In an April 17 earnings call, Netflix executives said they believed their profits would be shielded from the uncertainty wracking the rest of the economy.
Their comments show the company likely had no idea Trump’s announcement was coming.
‘Historically, in tougher economies, home entertainment value is really important to consumer households, and Netflix is a tremendous value in absolute terms and certainly in competitive terms,’ Ted Sarandos, Netflix’s CEO, said.
‘But what we’re seeing today, we’re not changing anything in the forecast.’
The new possible import taxes initially sent stock prices for major streamers sinking in the early morning.
If the White House ramps up the tariffs, some of the most-watched television shows and films will have to reorder their balance sheets.
Potential box office behemoths like Wicked: For Good and The Fantastic Four: First Steps, both made outside the US, could incur the tariff costs. Same for upcoming House of the Dragon seasons.
The largest line item in Netflix’s budget is television and film production
Multiple upcoming Disney films, including programs set for Disney+, could become more expensive to produce
President Trump said he would impose tariffs on foreign-produced movies to bring production back to the US – experts disagree with his assessment
Like other tariffs, Trump’s potential tax will likely create a foreign backlash and less choice for American consumers.
‘There’s also a risk of retaliatory tariffs against American content overseas,’ Barton Crockett, an analyst with Rosenblatt Securities, told Reuters.
‘Raising the cost to produce movies could lead studios to make less content.’
Hollywood production companies had already been in the crosshairs of back-and-forth tariff threats in the US trade war with China.
Beijing is restricting the number of movies produced in Hollywood that can play in its country, a move that can destroy the bottom line for multiple major US producers.
The Motion Picture’s latest economic report showed that the film and television industry’s global sales netted billions of dollars in revenue and created hundreds of domestic jobs.
