President Donald Trump has backed down from his reciprocal tariffs on Wednesday after days of market fretting and concern at home and internationally (at least for now), but for Hollywood, some of the industry’s biggest problems started well before Trump ever announced his so-called “Liberation Day.”
As IndieWire previously reported, Hollywood productions are moving overseas at an alarming rate, as the cost of doing business has made it cheaper to fly someone overseas than to film in your own backyard. Some executives have pointed to unions, while others say it’s largely a need for tax reform, as countries like Ireland or Hungary offer large tax credits as a pure percentage of a film’s budget, so the difference in recouped savings could be millions.
The irony of Trump’s tariffs is that they would have been more likely to drive Hollywood film production out of the U.S. rather than back into it, the exact opposite of what he hopes to influence on the American economy across other sectors. Various analyses from the trades have identified how media corporations could have been hurt by a myriad of related problems: taxes on streaming services, advertising uncertainty, lower attendance at theme parks, and more.
But in the case of production, the general rising filming costs on both indies and studio projects will only see further exacerbation of a problem that is already there.
As it was initially announced, the Trump administration’s tariffs would have targeted goods, not services, of which movies and shows are one of America’s biggest exports. It’s exactly why a recent report said that China was considering retaliating against the tariffs by banning American film releases. Trump kept his Chinese tariffs and boosted them to 125 percent, though a note from Wedbush on Wednesday cited the recent green light of Disney’s “Thunderbolts” opening in China and called retaliation with films “unlikely.”
“China has been laser-focused on boosting its exhibition industry,” Wedbush wrote in a note obtained by IndieWire. “While China can rely on its local-language content and other content in Asia (Japan, South Korea, and Indian content are also popular), Hollywood content certainly helps and will continue to boost its industry.”
So, in the grand scheme of things, there wouldn’t have been a direct impact to films, but think of the many line items that could incrementally increase production costs. The sourcing of textiles for costuming often comes from international markets. Cameras and other tech equipment may come from Japan, China, or elsewhere.
IMAX in particular has a major business in China and may need to, in the short term, adjust where it’s sourcing its cameras from. Even catering costs for coffee from a local small business could rise. The general cost of living expenses all add up.
“I think the biggest issue with the tariffs is that there were too many uncertainties,” Alicia Reese of Wedbush told IndieWire. “Whether it’s head of costuming for a movie or head of an entire corporation, you can’t plan on when these tariffs are implemented.” Enterprising indie producers generally are nimble, and many will buy piecemeal rather than buying in bulk, while others will race to acquire goods in the window before Trump changes course again.
Eric B. Fleischman, an indie producer on the film “Sacramento” that opens from Vertical this weekend, said the reality is many of the projects he’s been setting up have already pivoted to places like Ireland or Northern Spain, and the tariffs would have meant “whatever production was left in the States is gone.”
States had been working to curb this well before the new Trump administration, most notably with California Governor Gavin Newsom announcing a significant increase in the amount of dollars allocated for filming tax credits. While that proposal is gaining serious momentum, Fleischman argues it’s a half-measure and complained that California’s larger issues include a complicated application process, a lottery that only selects certain films for approval, and that only a small portion of a film’s budget qualifies for the credit.
Reese added that the revising of the tax codes will be the bigger issue, more than anything that would have come from the tariffs.
“These tariffs are going to be the nail in the coffin for the majority of U.S.-based productions,” Fleischman said ahead of them being repealed. For now, many of those tariffs may be on hold, but the damage has already been done in Hollywood.
