Hollywood on Edge as Trump Threatens Tariffs on Foreign Films

When President Donald Trump fired off a Truth Social post over the weekend announcing his desire to impose a 100 percent tariff on all foreign-made movies, some Hollywood executives and media members rolled their eyes while others panicked. Both reactions are appropriate. The timing couldn’t be worse for an industry still desperately thrashing about for a life preserver following the Covid-19 pandemic, Wall Street’s reversal on the streaming model, dual Hollywood labor strikes and the Los Angeles wildfires.

The theatrical film industry has been particularly pummeled. Box office revenues remain stubbornly below pre-Covid levels, with global figures dropping from a record $43.3 billion in 2019 to just $30 billion last year.

Domestically, despite hopes for a bounce-back, 2025 projections hover around $9 billion, according to The Numbers—a far cry from the reliable $11 billion floor the industry enjoyed throughout the 2010s. Major studios are collectively releasing 10 to 15 fewer wide releases per year than they did before the pandemic.

All considered, Trump’s proposed tariffs are less a solution than a Hail Mary aimed at an impossible equation.

The myth of the all-American movie

The concept of a purely “American-made” film is about as blurry as a college student’s vision after a frat party. Film industry analyst Stephen Follows’ research reveals the average blockbuster is shot in 1.6 countries, with nearly a quarter of Hollywood studio productions filming at least partially in the U.K. in 2019 and nearly 20 percent in Canada.

Modern filmmaking sprawls across borders by necessity—visual effects from London, sound mixing from Toronto, financing from multiple international partners, and so on. Slapping tariffs on this intricate global ecosystem threatens to destabilize already precarious production economics.

“I’m not a lawyer, but there does seem to be a gap between how tariffs are defined in the law and what could be applied to services,” industry analyst Entertainment Strategy Guy, who recently published an analysis of the trade war’s potential impact on Hollywood, told Observer. “My rule of thumb when analyzing the current administration is: wait until something is done, not just said.”

International backlash brewing

The greater danger may lie abroad. Even before Trump’s post, China had announced plans to further restrict American films—moves that could inspire other countries to follow suit if tariff tensions escalate.

For an industry that relies heavily on overseas audiences, that spells disaster. Before Thunderbolts, the Marvel Cinematic Universe had generated 56.2 percent of its gargantuan $31 billion in global ticket sales from international markets, according to Box Office Mojo and The Numbers. Other franchises are even more overseas-dependent: Fast & Furious (74 percent), Wizarding World (70 percent), Jurassic Park (62 percent), Despicable Me (62 percent), DC (61 percent) and Shrek (60 percent) all rely on international ticket sales for the majority of their revenue. Any reduction, limitation, or slowdown in international theatrical distribution will have damaging ripple effects on an already limping film industry.

Foreign governments have several retaliatory options: increased taxes on American content, tighter quotas or demands for significantly more local-language production in exchange for market access. Europe could impose new levies on U.S. movies and streaming services, while other countries might erect higher barriers for filming approvals.

Alternative approaches

Not everyone sees tariffs as the answer. Actor Jon Voight and his manager Steven Paul have reportedly pitched Trump on expanding federal incentives for domestic production instead—supplements to existing state-level tax breaks, according to Bloomberg.

Entertainment Strategy Guy suggests another approach. “The best way would be to limit subsidies provided by different states so production can benefit from economies of scale in only one to three locations,” he said. “The problem with subsidies is they become a race to the bottom with increasingly higher subsidies provided by different countries.”

While U.S. physical production has declined in recent years, the Motion Picture Association told Bloomberg that America’s entertainment sector maintains a positive trade balance globally, exporting three times more content than it imports. American streaming services like Netflix and Amazon Prime rely on global audiences to justify their massive content investments.

As Hollywood executives anxiously track developments, the message is clear: in an increasingly interconnected industry where international success determines whether franchises live or die, new trade barriers could devastate studios still reeling from the arsenal of curveballs thrown their way over the last five years. For an administration concerned with American economic strength, triggering the collapse of one of the country’s most valuable export industries would be an unexpected plot twist—and not the good kind.