Tariff tracker, May 6: Why Trump is tariffing movies made outside the US

“The Movie Industry in America is DYING a very fast death. Other Countries are offering all sorts of incentives to draw our filmmakers and studios away from the United States. Hollywood, and many other areas within the U.S.A., are being devastated. This is a concerted effort by other Nations and, therefore, a National Security threat. It is, in addition to everything else, messaging and propaganda! Therefore, I am authorizing the Department of Commerce, and the United States Trade Representative, to immediately begin the process of instituting a 100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands. WE WANT MOVIES MADE IN AMERICA, AGAIN!”

By themselves, US movies are still a massive winner for the US when it comes to international trade. According to a 2023 research note by the Motion Picture Association (MPA), the industry’s exports were valued at $22.6 billion, which, in turn, provided $15.3 billion in trade surplus; trade surplus denotes that the total money earned via movie exports was more than the imports of foreign movies.

“The industry generated a positive balance of trade in every major market in the world,” states the MPA report with exports being 3.1 times the imports.

“The industry runs a trade surplus larger than each of the telecommunications, transportation, insurance, and health related services sectors,” it further noted, with movies accounting for 6% of the total U.S. trade surplus in services.

Even so, there is a growing trend of movies being produced outside the US in a bid to contain costs and taxes.

According to a New York Times article from April, “Movies and TV productions are rapidly leaving California to film outside the United States, where labor costs are lower and tax incentives greater. Industry workers are exasperated.”

For instance, as NYT reported, “San Andreas,” a big budget movie about an earthquake in California, was filmed mostly in Queensland, Australia. Similarly, the producers of “The Floor”, a game show centred around answering trivia questions, fly Rob Lowe (the host) and 100 contestants across the Atlantic from Los Angeles to Dublin (Ireland) for shooting the episode.

Michael F. Miller Jr., a vice president at the International Alliance of Theatrical Stage Employees, told the NYT that roughly 18,000 full-time jobs have evaporated in the past three years, primarily in California.

“We are allowing California to become to the entertainment industry what Detroit has become to the auto industry,” Miller said to NYT.

The reason: International sites often come with lower labor costs and more expansive tax incentives than those that California offers, making it much cheaper to film there, according to NYT.