The "Focus" Trump movie tariff leaves the entertainment industry in a haze, with uncertainty dragging media stocks down across the board

The White House says no final decision has been made

Netflix's stock price fell 2%, leading the decline among media stocks

Analysts say tariffs will raise production costs in Hollywood

Tax credits and lower labor costs drive overseas production

Trump's order on film tariffs lacks details

Reuters Washington, May 5 - The entertainment industry was both worried and confused on Monday after President Trump announced a 100% tariff on all films produced outside the United States, without revealing specific implementation details.

The announcement made by Trump on Sunday is the latest move in his series of tariffs and threats aimed at boosting domestic industrial activity across various global sectors.

However, his trade policies—including tariffs, rollbacks, and investigations that could lead to more tariffs—have undermined consumer and business confidence due to their confusing implementation process, leaving many businesses in a difficult position.

The difficulty of imposing tariffs on films may even be greater than taking action against the highly integrated North American automotive industry.

It remains unclear how tariffs on the film industry would be implemented. Trump did not disclose whether he plans to impose tariffs on films released on streaming platforms and in theaters, nor did he clarify whether the tariffs would be based on production costs or box office revenue. Additionally, it is uncertain whether films co-produced by the U.S. and other countries—such as the "007" or "Mission: Impossible" series—would receive any exemptions.

On Monday, Trump told reporters that he would first meet with industry officials to ensure they agree with the idea. The White House stated that no final decision has been made, but noted that Hollywood's film output has significantly declined compared to the previous year.

"There is too much uncertainty, and this latest move raises more questions than answers," said Paolo Pescatore, an analyst at PP Foresight. "It seems unlikely to happen in the short term, as everyone is trying to understand the entire process. Costs will inevitably be passed on to consumers."

In January, Trump appointed Hollywood veterans Jon Voight, Sylvester Stallone, and Mel Gibson as ambassadors to help Hollywood return "bigger, better, and stronger than ever." He expressed hope that more films would be made in the U.S.

This uncertainty led to a broad decline in media company stock prices on Monday, raising concerns that this move would significantly increase costs for Hollywood film companies and disrupt the global entertainment industry.

If the tariff measures are implemented, the impact on Netflix (NFLX.O) could be particularly severe, as the streaming giant relies on global production to provide content for international audiences. Its stock price fell about 1.5% in afternoon trading.

Disney (DIS.N), Warner Bros. Discovery (WBD.O), and Universal Pictures' parent company Comcast (CMCSA.O) saw little change in their stock prices, having dipped earlier. Cinema operators Cinemark (CNK.N) and IMAX (IMAX.N) saw their stock prices drop 2.1% and 1.6%, respectively, with losses narrowing. IMAX declined to comment, while other companies have not yet responded to requests for comment Hollywood has been striving for tax incentives to boost production in Los Angeles. Los Angeles is the historical birthplace of the film industry and a dazzling film center. In recent years, major film and television companies have shifted production to places like the UK, Canada, and Australia, taking advantage of local generous tax credits and lower labor costs.

Barton Crockett, an analyst at Rosenblatt Securities, stated, "Increased film production costs may lead film companies to reduce content production. Additionally, overseas markets may impose retaliatory tariffs on American content."

Hollywood has already become a target for China, which vowed last month to limit imports of American films in retaliation for the broader tariffs announced by Trump. However, analysts say that due to the declining box office revenue in China, the impact of this action may be limited. (End)

Top filming hubs by production spend in 2024

Breakingviews: Trump’s Hollywood protectionism is a horror show