Trump’s Proposed Tariff Might be a Film Fantasy

It’s important to remember, before making any announcement, that the devil is often in the details.

This week, President Donald Trump announced his intention to levy a 100 percent tariff on movies made ‘in foreign lands.’ His intent, he said, was to rejuvenate the American film industry which, over the past several years, has seen production migrate first out of its traditional stronghold of Southern California and later out of the United States. His belief, seemingly, is that leveraging his favorite economic tool – the tariff – will make production in the United States economically viable again.

It's a plan with a lot more questions than answers. Let’s run down a few.

First – and perhaps most significantly – is defining what a foreign film production actually is. Is it any movie shot outside the United States? If that is the case, President Trump will find tariffs placed on American companies filming outside the United States. For instance, the new “Mission Impossible,” which opens later this month, was largely shot in England, with location shoots around the world. Those are certainly foreign lands, but the distributing the film, Paramount, and the production company funding it, Skydance, are both decidedly American outfits. Is the plan to add a 100 percent tariff on a movie produced by American companies that already pay taxes? That feels a little (a lot) like double-dipping and not much of an answer to Hollywood’s fiscal woes.

Another question stems from defining what 100 percent means? Is this a tariff on production costs? Production plus marketing? If marketing is included, does that include marketing inside the United States or just in foreign markets? Is it a retroactive tariff calculated after net and gross profits have been calculated? If that is the case, after how long? The math seems impossibly complicated.

One notable omission from the President’s proposed tariffs is television, but perhaps this is not surprising. A few companies that have invested heavily in television production – most notably Amazon – have made significant strides to align themselves with Trump. Should expensive overseas television productions, such as Amazon’s ongoing “Lord of the Rings” projects, get tagged with a tariff, that might eliminate much of that goodwill. It also allows for a little bit of a loophole. A movie made for a streaming service might, in fact, be considered television and therefore tariff exempt.

It should be noted that this proposed tariff has not, as of yet, progressed beyond the level of a social media post. There have been no proposals, executive orders, or bills drafted in association with what seems like an off-the-cuff comment. It is worth noting, however, that Trump has not – outside of his famous “Home Alone 2” cameo - had the warmest relationship with much of the entertainment industry. It, in fact, falls behind only behind education, legal professions, and publishing as the industry most likely to donate to Democratic candidates. The idea of tariffs aimed at an industry that has become increasingly dependent on foreign production may serve as an acknowledgement of this animosity.

The truth is – serious or not – Trump’s threat of a movie tariff does draw attention, albeit about 30 years too late, to a significant economic issue. The entertainment industry was once an economic pillar in California, and California’s prosperous economy was once an essential component of the United States’ fiscal health. As production became more financially prohibitive in Los Angeles it migrated, first to other states (such as Georgia) and then to Trump’s ‘foreign lands.’ There were probably tools and programs that could have been developed to have stopped this industrial bleeding – tax incentives worked wonders in Georgia – but at this point it feels like any effort made might be too little and too late. Infrastructure has relocated and economic relationships developed, and even tariffs as debilitative as those proposed will do much to turn back the clock.

Hollywood, it seems, has left Hollywood.