Hollywood is facing an unprecedented crisis as a result of Donald Trump‘s economic policies. There’s a sense in which the U.S.’ film and TV industries were struggling long before Trump returned to the White House; Hollywood had been hit by a combination of the post-pandemic economy, the end of peak streaming, and the impact of several strikes.

According to a report by the Otis College of Art and Design, jobs in the entertainment sector in 2024 were 25% below their 2022 peak, when Hollywood was initially booming after the pandemic. Other measures of production showed the impact, too; the number of shooting days in Los Angeles county decreased by 42% over the same period.

All that means Hollywood is currently in a very vulnerable position. Inflation ᴀssociated with Donald Trump’s economic policies is causing even more problems, and there are other issues too; the Trump administration’s tariffs pose major challenges. What will the impact be?

Production Costs Are Increasing Because Of Inflation & Tariffs

Hollywood execs had pinned their hopes on the idea things would get better in 2025; a year ago, the maxim was “Survive til ’25.” Inflation had already had a significant impact in previous years, with costs jumping nearly 8% in 2022. That meant the costs ᴀssociated with labor, transportation, and set materials had all increased.

Inflation is surging in America, driving fears that production costs will continue to increase at chilling rates. The tariffs add to this; tariffs on cameras, lighting, and sound gear add costs for studios, while there’s already been disruption affecting materials like lumber, paint materials, and plywood. As THR report:

“While no production department would be spared the brunt of an escalated trade war, the art department would be hit particularly hard given its reliance on raw materials. To construct sets, crew members frequently use lumber that might often be sourced from Canada and Southeast Asia, plywood from Southeast Asia and steel from China.”

Tariffs on softwood lumber from Canada have remained in place since April, when the tariff rate went from 14.54% to 34.45%. There’s no way that kind of dramatic change won’t have an impact on production.

Trump Intends To Tariff Any Foreign Movies

In May 2025, President Trump posted on Truth Social that he had authorized a 100% tariff on “any and all movies coming into our country that are produced in foreign lands.” That has been challenged in court, with a temporary stay granted and oral arguments for appeal scheduled on July 31.

Trump contends that this is necessary to save a dying Hollywood, but most commentators believe tax credits were the right mechanism to draw production back to the U.S. As writer, producer, director and financier Jeff Most told The Guardian:

“The idea of providing a stick with a tariff is quite counterproductive because it unquestionably will give rise to other territories doing a similar protectionist move and will ultimately then result in penalties to the consumer who ends up paying the price to the availability of material on streaming platforms.”

We haven’t seen the feared retaliation yet, although Australia and New Zealand have both pledged to protect their own film industries. All this adds to the uncertainty and instability, though, and it seems to be having a paralyzing effect on Hollywood; there are too many unknowns.

“I think the most likely consequence is not that more productions will be done outside of America, or more productions would be done in America, but probably that just fewer productions will (be made),” Scott Roxborough, Europe bureau chief of THR, told CNBC.

How The Trump Economy Is Affecting Box Office

All this is having a noticeable effect on the box office. There have been fewer blockbuster releases, while movies like Captain America: Brave New World and Snow White have underperformed. “Setting aside those first quarters directly impacted by Covid and its aftermath, the January to March industry box office in 2025 was the lowest it has been since 1996,” AMC CEO Adam Aron told Reuters.

Inflation means consumers have less money to spend on the movies. Meanwhile, there seems to be a mismatch between the kind of releases people are interested in and the films Hollywood is making; Christopher Nolan has argued that Oppenheimer‘s success showed the dawn of a “post-franchise world,” and Sinners‘ box office success – even in 2025 – suggests he may be right.

Even Streaming Is Being Affected By Inflation

We’re seeing streaming services routinely increase their prices, and this is sure to continue as costs increase. Netflix, for instance, has already increased prices five times since 2020 (per 9Meters.com).

In truth, the streaming model has always been problematic, and the lavish productions ᴀssociated with the streaming boom have long seemed unwise; there’s a reason Disney is pivoting away from streaming, with both Marvel Studios and Lucasfilm now prioritizing the big screen again rather than Disney+ TV shows. The problems are even more notable now.

Streaming prices have generally been rising at above-inflation levels for quite some time now; the cost of an ad-free Disney+ subscription has increased by 14.3% since its launch, with notable increases for Netflix, Prime Video, and Peacock. A recent survey by Hulu revealed that consumers are more aware of price rises at times of high inflation.

There is a silver lining to that particular cloud, though; the same study revealed consumers were also reluctant to cut back on television, perceiving them as better value than other entertainment alternatives. Only vacations were seen as more valuable – meaning only 25% of those surveyed anticipated the possibility of cutting back.

This means streaming services may have something of a cushion from the impact (although theaters will be more concerned). But it all depends on the extent and duration of the economic situation; Hollywood will be hoping the instability doesn’t last for long.