Donald Trump‘s Truth Social announcement that he planned to impose 100% tariffs on films shot outside the United States surprised the entertainment industry and even members of his administration.
Since then, there have been more questions than answers, but the White House later cautioned that no final decisions have been made, while the president later told reporters that he would be meeting with representatives from the entertainment industry. “I want to make sure they’re happy with it, because we’re all about jobs,” he said.
Just who will be present at such a White House meeting has not been set, and nothing has been announced. But Trump has shown that he prefers cameras present for at least portions of Oval Office encounters, while he’s identified the problem of runaway production as urgent enough to be a national security threat. In other words, fixing Hollywood is now on his agenda.
The Motion Picture Association has not yet commented on Trump’s tariff plan.
MPA board members, including top CEOs and other representatives, plan to meet on Friday, with next steps expected to be a topic, sources said. The board includes representatives from Disney, Netflix, Paramount, Amazon, Sony, Universal and Warner Bros. The Hollywood Reporter first reported on meeting plans.
Curiously, the tariffs did not come up during the Disney earnings call this morning, nor was it raised during Disney CEO Bob Iger’s interview on CNBC. But the network’s Sara Eisen asked Hugh Johnston, Disney’s CFO, about it. “I think it’s a little early to try to do the math on 100% tariffs or anything like that,” he said. “What I was actually most encouraged by was the president talked about the fact that he wants to help the industry and he wants to make the industry stronger.”
As Deadline reported earlier in the week, Netflix‘s Ted Sarandos sending out a note today to the streamer’s staff essentially telling them to stay cool.
The U.S. Trade Representative and the Commerce Department are studying the Trump tariff proposal, something that has seen some receptivity among labor groups.
Trump’s announcement came after Jon Voight, one of his special ambassadors to Hollywood, presented him with a plan to “Make Hollywood Great Again.” It included not just a tariff proposal, a 120% levy against the value of a foreign production incentive, but a federal tax credit and plans to boost tax provisions to help theater owners in addition to producers. Also included was a revival of the financial interest and syndication rules, which prohibited broadcast networks from having ownership of their primetime programs.
The 1993 repeal of fin-syn, as it was called, has long been a source of discontent in the creative community, while Voight’s plan also calls for some application to streaming. Such a plan may very well need congressional approval, and it’s not hard to guess that companies would lobby hard against it, drawing on the deregulatory drive that still pervades a large chunk of the Republican majority.
The industry itself seems united on one idea: A much more robust federal tax credit.
A coalition of groups, including the MPA, the DGA, SAG-AFTRA, the Writers Guild of America East and the Producers Guild, shared a proposal with Voight’s team last week that calls for a federal domestic manufacturing and production incentive. They urged that such an incentive be included in the reconciliation tax bill currently being written by Republicans in Congress. “A domestic production incentive would make the U.S. market more competitive and able to retain and return high-paying jobs tied to film and television productions,” the coalition said, while noting that U.S. movies and TV shows have yielded a $10.3 billion trade surplus.
A federal incentive in the pending tax bill also would run up against a mass of competing priorities in the legislation, as Trump also has pushed for no tax on tips and big state lawmakers want a greater state and local income tax deduction.
The industry groups also called for an extension of Section 181, which allows up to $15 million of production expenses to be deductible in the year they are incurred. First put in place in 2004, a renewal of that provision seems like less of a heavier lift than the larger production incentive.
As for tariffs, there is a general feeling in D.C. that no one is quite sure what will happen next.
Some economists have pointed to the International Emergency Powers Act, under which Trump has cited his authority to impose the levies, and the fact that films are specifically exempted from those powers. But there is also the chance that the Trump administration could try to pursue tariffs in other aspects of the production process. When it comes to runaway production, Trump has bashed California Governor Gavin Newsom. But the governor has called for a national production incentive, while leading a state effort to challenge Trump’s overall authority to impose tariffs.
