Trump’s 100% Tariff on Foreign Films: A Hollywood Hail Mary or a Trade War Blunder?

The Trump administration’s proposed 100% tariff on foreign-made films—framed as a “national security” measure to revive Hollywood—has ignited a firestorm of legal, economic, and diplomatic controversy. With studios like Disney and Netflix increasingly relying on international production hubs, the policy’s potential to disrupt global filmmaking while exacerbating trade tensions looms large. For investors, the tariff’s viability hinges on navigating a minefield of logistical, political, and market risks.

Legal and Practical Hurdles

The tariff’s most immediate obstacle is its legal foundation. Films are classified as intellectual property, not physical goods, making traditional tariffs inapplicable under existing frameworks. While Trump cites the International Emergency Economic Powers Act of 1977 to justify the move, courts have never applied this law to intellectual property. Analysts warn that lawsuits challenging the policy’s constitutionality or scope are inevitable.

Defining what constitutes a “foreign-made” film further complicates enforcement. For instance, Mission: Impossible – The Final Reckoning, filmed primarily in the U.K., might face tariffs even if post-production occurs in Hollywood. This ambiguity could ensnare U.S. studios themselves: Disney’s Star Wars series, which blends global locations and crews, could become a target.

Industry Backlash and Economic Realities

Hollywood’s major studios have been notably silent or skeptical. The Motion Picture Association (MPA), representing giants like Warner Bros. and Paramount, has long opposed tariffs in favor of federal tax incentives to compete with Canada’s 30% rebate or the U.K.’s 25% subsidy. The trade group argues that foreign incentives—not tariffs—are the root of Hollywood’s decline: Los Angeles has lost 40% of its film production over the past decade to tax-friendly rivals like Toronto and Dublin.

The data reveals a stark reality: domestic box office revenue has fallen from $12 billion in 2018 to $9 billion in 2024, a decline driven by pandemic aftershocks and streaming’s rise—not foreign competition. While 2025 has seen a modest rebound (up 15.8% year-over-year), it remains 25% below pre-pandemic levels.

Global Trade Risks

The policy’s ripple effects could extend far beyond Hollywood. China, the world’s second-largest film market, has already retaliated by reducing its annual quota of U.S. films from 34 to 25—a move it explicitly tied to U.S. “abuse of tariffs.” This reduction threatens studios like Disney, which rely on China for 8–10% of their global revenue.

The data shows a clear correlation: as U.S. tariffs on Chinese goods rose, China’s share of U.S. box office revenue dropped from $870 million in 2018 to $450 million in 2024—a 48% decline. A further squeeze could force studios to prioritize cheaper domestic productions over costly international blockbusters.

Investment Implications

For investors, the tariff’s impact is a double-edged sword.

1. Near-Term Volatility: The policy’s uncertainty could pressure studio stocks. Disney’s shares, for example, have already fluctuated widely amid trade war fears and labor disputes.
   
   The graph shows Disney underperforming the S&P by 25% since 2020, reflecting broader industry headwinds.

2. Long-Term Risks: A full-blown trade war with China could kneecap studios’ global growth. Netflix and Disney+ have invested heavily in international streaming, but tariffs could deter foreign audiences from consuming U.S. content.

3. Alternatives to Tariffs: Investors may want to focus on companies betting on domestic solutions. California’s proposed tax credits for local production, if enacted, could favor studios like Lionsgate or Paramount that keep production in the U.S. Meanwhile, streaming platforms like Amazon Prime (AMZN) and Apple TV+, which rely less on theatrical releases, may weather tariffs better.

Conclusion: A Policy with More Drama Than Substance

The 100% film tariff is a politically charged plot twist in Trump’s “America First” trade playbook. Yet its feasibility is undermined by legal ambiguity, industry indifference, and the reality that Hollywood’s struggles stem from structural shifts—not foreign subsidies.

Investors would be wise to treat the tariff as a red herring. The real story is the industry’s pivot to streaming, the decline of theatrical dominance, and the relentless competition for global audiences. With box office revenue still 31% below its 2019 peak, studios must focus on innovation—not protectionism—to thrive. As the curtain rises on 2025, the audience is likely to find more substance in tax incentives or labor peace than in a 100% tariff destined for the cutting room floor.

Data Sources: Motion Picture Association, U.S. Census Bureau, China Film Administration, Bloomberg Finance.