Over the weekend, President Trump dropped a social media post decrying the state of the film industry in The United States. He said he’s instructed the Department Of Commerce to “begin the process” of placing tariffs on all movies shot outside the country. Immediately, social media exploded with fears about what this might mean for various movie studios and production houses, and several prominent media companies showed notable declines in their stock prices. With no timelines and few details, however, there’s a lot of uncertainty and several questions that still need to be answered before anyone knows what exactly this might mean.
Before we get into those questions though, let’s back up real quick and talk about the state of the film industry in The United States and more specifically, Los Angeles. In his social post, President Trump said movie-making has been “devastated” in Hollywood. The numbers back that up.
a recent report from FilmLA, the group that handles permits in Los Angeles, shooting is down more than twenty percent year over year. Television production is down almost fifty percent compared to an average of the last five years. Only 13 total pilots were shot in LA in the first quarter of this year, the lowest number in any quarter since FilmLA started keeping track. Sound stage usage is down. Permits being pulled are down. Anecdotally, there are a lot of people in the industry in Los Angeles talking about the struggle to find work. Something is clearly going on. The question is why.
In President Trump’s social post, he blames a “concerted effort” by other nations to offer incentives to filmmakers to shoot on location in their specific areas. You can read his message in its entirety below…
Now, it’s easy to verify that some of that is happening. Locations within The United States, Georgia most prominently, have started offering aggressive tax breaks and incentives for productions that film in the state. Officials literally produced brochures for movie studios and indie filmmakers that go over exactly how it works, and it has worked.
Georgia now has more movies and tv shows filmed on location than every State except California and New York. In fact, this has become such a problem the past few years that Governor Gavin Newsom has loudly and aggressively called for an expansion of California’s own tax incentive program to try and keep up. A bill is currently working its way through the state legislature.
To President Trump’s point, that same thing is happening with other countries too. Canada, the city of Vancouver in particular, has become a hotbed for filming and now attracts nearly 2 billion dollars a year in movie and tv production. That number was only expected to increase, as well, as local lawmakers recently passed even more generous incentive packages to try and entice more productions. Mexico has also become a hotbed for filming, as it offers cheaper costs and its own lucrative tax breaks. The UK and other countries in Europe have also started following suit and begun loudly courting the major studios with their own packages.
In short, producing movies and tv shows, regardless of budget sizes, now often involves incentive shopping. Whether they stay in The United States or not, most production companies are looking for the best deal, and even the actors have become jaded and are very open about how the process works. If a studio can shoot somewhere cheaper, they’re probably going to do that, and with the current pricing structure and cost of living issues in Los Angeles, Hollywood has become a lot less desirable.
Something Else Is Going On Too Though.
In the 1990s and 2000s, the major Hollywood studios combined to release more than 110 theatrical movies per year on average. Over the last few years, that average has barely topped 80. The TV show numbers are just as scary. Back in 2018, there were more than 16,000 episodes of television produced. In 2024, that number barely topped 11,000 episodes.
When the streaming services first started coming into prominence, cable television was still operating at near max capacity. The major networks were all filling every available primetime slot, many cable networks were creating their own original programming and the premium channels like HBO were still in the midst of a creative renaissance.
Over the last few years, however, almost everyone other than Netflix has started pulling back. Many of the streaming services are still struggling to be profitable and have reduced production costs. Many cable networks have stopped producing their own programming, and the major TV networks have reduced their own spending, sometimes cancelling popular shows simply because they’re expensive to produce.
So, right now, the movie industry is in a position where a lot of companies are reducing the number of movies and TV shows they’re creating. Combine that with there being way more competition by other states and other countries to offer incentive programs and cheaper locations to film, and it’s been a perfect storm of problems for Hollywood.
So, Would Tariffs Help? And How Would They Even Work?
The problem in predicting what might happen if tariffs were to go into effect is we don’t have any idea what they might actually look like. President Trump said he’s planning to roll out 100% tariffs, but we don’t know how those would be calculated.
Would half of any ticket sold for a movie produced outside The United States be paid to the government? That would likely create a system in which certain movies were more expensive to see in the theaters, which would likely be a catastrophe for the box office performance of those movies.
And what about if a movie went straight to streaming? Would the production be charged a fee based on its actual budget? If a movie cost $50M to shoot, would producers have to literally pay the The United States government a $50M penalty, sort of like how the luxury tax works in some professional sports if you spend over the salary cap?
None of this accounts for television or future rights payments or a wide variety of other issues either. Producing art is a lot more complicated than producing a manufactured good. That doesn’t mean these obstacles are insurmountable. It just means it’s a lot more complicated to forecast how any of this might work.
What’s Going To Happen?
No one knows.
There has been a lot of talk about tariffs since President Trump took office. He’s vowed to make America’s trade agreements fairer, but there are wide disagreements amongst experts and political pundits about what fair actually means.
In the last hundred days, President Trump has advocated various positions. At one point, he seemed poised to drop moderate to massive tariffs on basically every country in the world, but after some negotiations, an overwhelming majority were paused so new agreements could be worked out. Those deals are still being negotiated, and no one is quite sure what they’ll look like or when they’ll go into effect. So, obviously, there’s going to be uncertainty around these proposed film tariffs for awhile.
Many experts in Hollywood are calling them the potential end of the film industry as we know it. They feel studios won’t be able to make the types of movies they’re making in Los Angeles for the budgets they’re making them at, which would mean cutting costs or reducing the number of films made. They also worry other countries will impose their own tariffs on movies shot in The United States, which would greatly reduce foreign grosses.
Others are cautious embracing the tariffs, as they feel the current tax incentive system isn’t good for anyone. They want to see a dramatic change in how business is done and feel only a massive jolt to the system will save Hollywood from losing more and more business to other countries. They also point to many animation and VFX jobs going to foreign countries and wonder if tariffs would help keep those in The United States.
Right now, all we can do is wait for more information and listen when the major studios start commenting publicly on how they feel this will affect business.