Financial markets offered an early and negative response to President Donald Trump’s plans to slap 100% tariffs on movies produced outside the United States with shares of media and entertainment companies down in early trading across the board.
Netflix, which has been on a roll, slipped 4% at the open and Warner Bros. Discovery is off by 3%, Lionsgate by 5%. Disney and Paramount shed 2%. Exhibitors from Imax to Cinemark to AMC are trading lower. Market have been volatile but the DJIA, S&P and Nasdaq are also down for now, but by less. It’s unclear how, where, when or if import taxes on movies the president floated Sunday might be applied in an interconnected, highly international business. But, meanwhile, uncertainty is messy. How messy remains to be seen.
Hollywood content is considered a service not good and although there’s been simmering anxiety across the industry as the administration’s tariffs upend sector after sector, film and television players have been cautiously optimistic that they’d be spared. The president’s plans as expressed on his Truth Social platform last night target only film. The news has bubbled up with media set for a big set of quarterly earnings, and potential CEO commentary, this week including Disney up Wednesday and WBD and Paramount on Thursday.
The possible tariffs are meant as a hit to other countries – Foreign Lands as Trump calls them — that offer tax incentives to attract production just as Georgia and other states do in the U.S. While there’s been a call to keep more production Stateside, what the president is contemplating could be a hit to jobs in the U.S. if companies scale back, rippling through production and distribution of film of all sizes. Indie film producers film where its cheapest and Hollywood studio have far flung productions. For now, it’s sowing confusion. The U.S. content industry is one that runs a particularly large trade surplus with the rest of the world.
Trump wrote on Truth Social, “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!”
The office of California Gov. Gavin Newsom told Deadline last night that Trump has “no authority” to impose the movie tariffs. The president has been using the International Economic Emergency Powers Act to impose the levies on imports from global trading partners, a move that has been challenged in court.
Legendary investor Warren Buffett, who announced his retirement over the weekend, called the tariffs “a mistake.”
“Trade should not be a weapon,” Buffett told shareholders at the annual meeting of Berkshire Hathaway.
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