100% tariffs may be coming for Hollywood's biggest releases

Amid diminishing theater attendance, unpredictably at the box office and Hollywood’s ongoing production flight, the film industry may be facing another obstacle.

President Donald Trump announced in a post to Truth Social on Sunday that “any and all Movies coming into our Country that are produced in Foreign Lands” may soon be subject to 100% tariffs.

Trump cited recent economic downturns to the U.S. film industry and incentive programs that encourage filming abroad as reasons for the tariffs.

On LAist’s daily radio show, AirTalk, Reuters' U.S. entertainment business correspondent, Dawn Chmielewski, and Kevin Klowden, an executive director of Milken Institute Finance, helped make sense of what this new tariff announcement could mean for California’s film industry and the questions that remain.

What does it mean to be produced in a foreign land?

What qualifies as a film “produced in foreign lands” is still unclear, but it could mean that films like this year’s summer blockbuster A MineCraft Movie could be subject to tariffs, as part of its filming took place in New Zealand.

“Do we mean a production that is produced by a foreign company? Do we mean something that is filmed overseas?” asked Klowden. “Is it going to affect the entire production? Is it a tariff on the percentage that's filmed overseas?”

Some of this year’s most anticipated movies, such as the newest installment of Mission Impossible, the third Avatar movie, and Marvel’s latest Avengers film, were all shot outside the U.S., according to Chmielewski.

Chmielewski said it's unclear how tariffs would be assessed. Would it affect consumers buying tickets? Or studios paying for doing production abroad?

“ One studio exec I spoke to compared film production to cars. The parts are made elsewhere, but assembled here in the U.S.,” Chmielewski said.

Will this fix Hollywood’s problems?

Hollywood’s economic downturn started years ago, mainly spurred by the dominance of streaming and later compounded by pandemic shutdowns and halts to production due to strikes.

According to Chmielewski, Hollywood’s film and television production has fallen more than 40% in the last decade.

Tariffs "might bring production back to the United States, but it might also then cut off the ability to finance or sell these productions overseas, which might reduce the amount of content that's created even more,” said Klowden.

Filming in Los Angeles is expensive.

Some of the recent costs may be attributed to new rate increases negotiated by SAG-AFTRA and the Writer’s Guild, said Chmielewski. But production flight has been an issue for a long time, with productions moving to Atlanta, Toronto and other locales.

Even with California Gov. Gavin Newsom’s proposed doubling of the film tax credit and expansion of which films qualify, Hollywood just can’t compete with incentives overseas.

“ Producers tell me that they really want to make movies here in California, but the economics just aren't working,” said Chmielewski.

Hollywood’s reliance on the foreign box office

Even films majority made in America rely heavily on foreign markets for revenue.

A MineCraft Movie added $150 million to its overall gross just at the international box office.

“ More than half of the studio's revenue comes from overseas box office, overseas streaming, overseas releases,” Klowden said.

He said retaliatory tariffs would affect how films are exported.

“ This summer is filled with high profile films that are also getting distribution in China, which is another market that sought to restrict film imports from Hollywood,” said Chmielewski.

And what about streaming?

“ A company like Netflix, much of its audience is outside of the U.S., and the majority of its production now is taking place outside of the U.S.,” said Chmielewski.

It is still unclear how streaming will be affected and whether tariffs will be implemented ultimately.

But for moviegoers concerned about this year’s films, Chmielewski said things look promising.

“ The industry does have hope that for the remainder of the year there will be a healthy summer,” she said.

Listen to the conversation