Movie business quakes amid Trump's proposed tariffs on industry
Spinning Hollywood's Dilemma: President Trump Wants to Tax Foreign Films
The movie world is scratching its collective head at President Trump's sudden craving for a 100% tax on flicks created beyond U.S. borders.
Executives from movie studios and streaming industries, who've communicated with CNN, are about as chilled as an iceberg because, in their view, POTUS hasn't taken a second to consider the potential fallout. Case in point: the possible annihilation of a cherished business.
"At first glance, it's mind-blowing and would basically mean the production grinds to a halt," one insider spilled. "But honestly, he can't do this, and it's way too tricky to enforce."
Some are opting for a more open-minded take, considering that the commander-in-chief is addressing a genuine issue - "runaway production" – that's left many Americans in the movie and TV manufacturing industry out of work.
However, the proposal to slap a tax on films has added another layer of confusion to an already chaotic sector. Stocks for Netflix and other major entertainment firms dipped Monday as investors digested Trump's puzzling discourse.
"In its current form, the tax doesn't make sense," said Jay Sures, United Talent Agency's vice chairman to CNN.
Filmmakers and directors often prefer homegrown settings. However, "producing movies domestically can be costlier as studios must cover travel expenses, accommodations, and wages, since labor costs, rebates, and the ability to shoot abroad are significantly cheaper," Sures pointed out.
The proposed tax may never come to fruition, some in the industry believe. Movies are intellectual property, not merchandise, so they're typically exempt from taxes. Employing such a tax on foreign films could prove complicated.
Additionally, Trump's claim that foreign film production poses a "national security threat" may stretch legal boundaries.
Despite doubts, entertainment industry leaders are taking the possibility seriously. Multiple executives have reportedly reached out to Commerce Secretary Howard Lutnick about the proposed tax, according to two sources acquainted with the discussions. Lutnick allegedly responded to Trump's tax demand on Sunday night with, "We're on it."
It's unclear if Trump's remarks were merely an opening ploy, as Hollywood lobbyists have been advocating for incentives like tax credits rather than penalties like taxes.
Movie and television production has shifted away from its traditional Hollywood roots, heading to various U.S. states and countries in search of tax incentives and cheaper costs.
Last week, Variety reported that a wide range of films, from low-budget indies to studio blockbusters, are being made in countries like the U.K., France, Germany, and Hungary, shocking the European film industry.
It's debatable whether Trump's idea is an attempt to penalize Canada, where the majority of films are now being made thanks to tax incentives. Some even whispered, "Is he messin' with us because we didn't vote for him?"
As for the James Bond, Harry Potter, Dune, and Emily in Paris series, well,One industry source hilariously questioned, "Has anyone told him what this will do?"
CNN's Kate Irby contributed to this report.
Insights:
A potential 100% tax on foreign films could impact global trade relations, global film distribution networks, and the cultural and social diversity of U.S. audiences.
Legal, administrative, and industry opposition could prove challenging for the implementation of such a tax, raising questions about its economic viability and feasibility within international trade agreements.
If implemented, a tax on foreign films might increase costs for consumers, lead to piracy, and disrupt the global film industry and U.S. jobs in the long term, despite boosting some aspects of the domestic film industry.
- The entertainment industry, including movie studios and streaming platforms, are apprehensive about President Trump's proposed 100% tax on foreign films, as it could potentially halt production due to its impracticality and complexity in enforcement.
- Some industry insiders, however, understand the underlying concern behind the proposal, namely the "runaway production" issue that has left many Americans in the movie and TV manufacturing industry jobless.
- Netflix and other major entertainment firms experienced dips in their stocks on Monday as investors grapple with the uncertainty surrounding Trump's suggestion, which has added another layer of confusion to an already chaotic sector.
- It's debatable whether Trump's proposal is an attempt to penalize countries like Canada, where a significant amount of film production is now taking place due to tax incentives.
- As the tax proposal may never come to fruition, some in the industry question if Trump's remarks were merely an opening gambit, given that Hollywood lobbyists have been advocating for incentives like tax credits rather than penalties like taxes.
