The film industry has been through a lot in the past few years. A global pandemic that shut down productions and movie theaters; a historic dual strike of the writers and actors guilds; fires that devastated parts of Los Angeles. Now, Hollywood is headed for another period of precarious uncertainty: On Sunday, via his Truth Social account, Donald Trump announced a forthcoming 100% tariff on movies produced outside the United States.

Trump offered no details on how this tariff would work, and I had a tough time imagining it. Movies aren’t really like the imports that are traditionally subject to tariffs, which come into the country in set amounts at set prices that can then be taxed. When would the tariff be levied, and who would be responsible for paying? Would it be 100% of the budget? The ticket price? Is any of this even possible?

In media coverage of this announcement, everyone seemed to be asking these same questions. So, I reached out to an economist to try and get some answers. Mark Blyth is a political economist and academic, currently the William R. Rhodes Professor of International Economics and Professor of International and Public Affairs at Brown University. He’s spoken on tariffs before, published on Trumpism, and co-authored a new book called Inflation: A Guide for Users and Losers that’s releasing this month. If anyone could help me understand what this new tariff might look like, it was him.

What Would A Tariff On Movies Look Like?

“Films Aren’t Really Goods That You Consume”

Turns out, though, that there’s a reason a tariff on movies made overseas is difficult to understand. According to Blyth, “it’s totally insane.“

I guess starting broad, I’m struggling to understand how something like a movie could be tariffed…

Mark Blyth: It’s totally insane. Yeah, you’re right, it’s completely nuts, right? What’s the end product? Is it a cinema ticket? So, you’re going to have movies whereby you spend $20 to a attend the movie theater, but $40 if you want to see this movie. Right? That’s never going to happen.

So, you think that if something like this were put into practice, however it would be, that the cost would ultimately be reflected in the ticket price, and that’s where the difference would be?

MB: Well, I mean, that would be one possible way of doing it, but I think the broader point is, this is completely unhinged. I mean, this is taking tariff frenzy to a new level. Because ultimately, if you think about it, films aren’t really goods that you consume. It’s not like a car that comes from Germany and you can slap a tariff on it, right?

It’s more sort of like a piece of intellectual property that you get to share for two hours in exchange for a ticket. So, how do you actually tariff that?

Okay, so what’s being tariffed? Is it the fact that it was made on location? Alright, let’s think of a film like Interstellar. A huge part of that was done in Iceland on a glacier. There’s just no way of doing that in Southern California, right? So, do you just no longer do that? Is anything that’s sH๏τ on location then subject?

Is it where the financing comes from? Because the financing can come from Asia, and the film can be sH๏τ in Pinewood in London, and then it can be released globally under an American label. So, just even thinking of this as a thing that can be tariffed, I don’t even know how to think about it. I don’t think most people actually do.

[…]

I literally don’t know how you would do this. I mean, let’s imagine you’ve made a film, and now you want to release it in the United States. The point of importation for that film would be when it is digitally uploaded to servers and movie theaters, and then you press play. Other than that, what could you do? You could look at the firm, you could tax the firm more, but that’s more of a sort of a tax rather than a tariff per se, because it’s not on the good, it’s on the company. I mean, I just literally don’t know how you would do this.

If you make your iPhone in China rather than India, and things come from China and get off a boat from China, then you can say, this is China’s stuff, everything here costs a hundred dollars more, or however you want to do it. But a movie that’s like, the funding comes from Asia, the talent comes from the United States, it’s sH๏τ in the United Kingdom and Iceland. What exactly is this thing? They’re global products. So, unless you’re saying everything has to happen in the United States, which is expensive and probably impossible, but then also again it still comes down to this: At what point do you levy the tariff? I mean, the only thing I can think of is the actual point of consumption in the movie theater, and that just seems a bit mad…

And then, what do we do with streamers? What do we do with streamers, then? Basically, do the streamers pay an import? It has to be some kind of additional tax or something, because it just doesn’t make sense to think of this as a car or a bottle of French wine. You can drink the California stuff or you can drink the expensive French stuff that has a tariff on it. You can consume the American movie or you consume the foreign movie… I just, I can’t, I can’t get my head to that space.

So, it wasn’t just me – as a concept, a tariff on movies doesn’t make a lot of sense. I raised the issue of films like Mission: Impossible – The Final Reckoning, which was filmed in various locations all over the world for primarily narrative reasons. Being a globetrotting, sH๏τ-on-location blockbuster is part of the franchise’s idenтιтy. Blyth not only acknowledged the issue of trying to define what would and wouldn’t qualify a film as produced overseas, but mentioned this issue applies to tariffs outside the realm of movies as well:

MB: Unless everything is made, sH๏τ, hired, paid for in the United States, then it’s by definition a foreign product? I mean even with regular startups, it gets complicated, because it’s all based upon this idea of the Germans make a car, we make a car, we tariff the German car, people buy more of our car. The vast majority of trade in manufacture are what economists call intermediate goods. The stuff that goes into other stuff that other people are making. And they cross borders multiple times.

And once you start to think about tariffs that way, that’s why people worry about the new inflation rate. This seems to be entirely different. This is putting a tariff on an IP, an intellectual product. […] This is one that clearly he woke up in the middle of the night, having had dinner with Mel Gibson, and thought, ‘I’m going to do this one,’ without really giving it that much thought.

Could Trump’s Plan Still Encourage Hollywood Productions To Remain Stateside?

“What Would My Incentive Be?”

Still, even if a tariff on internationally produced movies might not be firmly based in what’s economically possible, the issue of Hollywood productions going overseas rather than remaining in LA is real. Other countries (and even other states) lure films away with tax incentives, and even if California has their own policies in place, the cost of shooting in LA makes it difficult to compete. I ᴀssumed I knew the answer at this point, but I still wondered, is it possible that Trump’s suggestion could have the desired effect of keeping more film shoots in the US?

MB: I can’t imagine why. What would my incentive be? My incentive would be, I could do it here because I’m getting a tax break for doing so, or I’m going to be taxed in some other way to make it more expensive for me. Alright, if I’m going to green screen everything, and I’ve got the capacity to do it, and I’ve got the studio space to do it, and I guess you could make a case for doing that, but if that’s what I’m going to do anyway, I’m probably going to be here still making stuff, right?

But even then, I mean you think about a production like Game of Thrones, where did they shoot the whole thing? They did the whole thing in Northern Ireland, and basically they turned the entire country into a set for six years. And when you’ve got that degree of capacity for doing that, and you’ve got the crew, you’ve got the experts, everything’s there, it’s on tap, are you really going to dump all that and then come back and try and recreate the whole thing in a very different, more expensive environment just because there’s a tariff? Probably not.

Blyth emphasized that this element of crew and expertise is more critical to the discussion of a potential tariff than might immediately come to mind. He noted that what’s often missing in the Trump administration’s deployment of tariffs is an emphasis on the experience that will be required for US industry to properly step up. A tariff might be able to deter consumers from buying foreign products, but will the production jobs really come back stateside if there aren’t people that know how to do them?

MB: I mean, part of the problem as well, I spoke to Christopher Nolan’s set designer a wee while ago, he’s a British guy, and he made the observation that loads of stuff is made in London not because of the tax breaks, which are nice, and the lower cost. It’s because skills that you need to do things like actually build sets – carpenters, electricians, all the rest of it – the Hollywood studios paid all those guys off and pensioned them off 20 years ago and never replaced them. You literally can’t do this stuff.

So, unless you’ve going to green screen everything, you just can’t actually make films in Hollywood anymore. So this is in a sense, a classic story about why Trump wants to tariff things. We stopped making things 20 years ago. We lose the skills to make things, and then one day you wake up and realize you can’t make things and now you’re going to put up tariffs to make it so expensive that you would then make things back here. But the tariff’s only the first step. You’re going to have to basically train a whole new generation of set designers, production engineers, everything that goes into actually making the physical reality of movies. And we just haven’t done that for 20 years and that’s why we do it in England.

[…]

If you’re competing against a tax incentive, then it would make sense to offer a rival tax incentive. Or alternatively, you have a negotiation with all the countries and you say, ‘Please stop doing tax incentives. We’re just cannibalizing each other’s industries.’ Tariffs are a tool, but as I said before, it’s only the first step in the process. You actually then have to bring home the capacity to do so, and that means that you have to start doing things like training set designers and all this sort of stuff that simply don’t exist. So it’s not actually a functional policy in that regard.

And we’d be far better to either have equal compeтιтion on the tax side or also recognize that it’s not just about taxes. I mean, again, as Nolan’s set designer said to me, it’s the crew, right? When he goes to India, for example, to film something, he uses some locals, but he tends to take Brits with him and he also takes Icelandic people. Why? Because they can deal with harsh environments, so they can deal with the unexpected. Why? Because they’ve been making films in crazy places for 20 years. If you don’t have the people who can do this, you can’t do the film.

And that goes way beyond tax incentives or tariffs.

After talking to Blyth, it’s clear that a tariff on movies isn’t the answer to Hollywood’s production woes. And while plans like Governor Gavin Newsom’s to more than double California’s film subsidies might yield better results, tax incentives can’t be the solution alone. If Hollywood really wants more movies filmed in Hollywood, the industry needs to invest in the insтιтutional knowledge of moviemaking craft that made the US such a cinema powerhouse in the first place, and that studios have become too comfortable seeking out elsewhere.