With Thanksgiving’s approach, movie studios are gearing up for the release of some of their biggest films of the year. But—as with many other industries—tariff policies are adding more uncertainty about the financial success of new releases.

Overall, tariff policies may cut into attendance if people reduce their entertainment spending because of higher prices in the economy. But, in addition, President Trump has warned that he is considering a 100 percent tariff on “any and all movies that are made outside the United States.”  

His proposal responds to a real concern in Hollywood. Over the past decade, movie and TV production has dropped by over a third just in Los Angeles as states and foreign countries offer incentives—such as tax credits—to film in their jurisdictions (as the UK provided to the US producers of Wicked). Imports of foreign films and TV shows totaled over $7 billion in 2023, a third of the amount raised by exports of US productions. 

In theory, a 100 percent tariff could put a significant dent in imports of foreign-made films into the US. But the president’s tariff proposal must first overcome significant implementation hurdles raised by questions of definition, assessment, and legality. 

Hurdle 1: What is a foreign-made movie?

The President could turn to the Academy of Motion Picture Arts and Sciences for a definition. To be nominated for an Oscar in the best international feature film category, the movie must be produced outside the US and its territories, over half of its dialogue must not be in English, and creative control must “largely be in the hands of” the submitting country’s citizens, residents, or individuals who were granted refugee or asylum status. 

But the president’s concern about keeping film production in the US suggests more expansive—and complicated—rules. Hollywood studios have been filming in foreign countries for decades, but for widely different reasons. Would a 100-percent tariff apply to US-produced films made outside the United States?

For example, La La Land was partly an homage to Los Angeles and the actors and musicians who work there, but the ending included a 40-second scene in a Parisian jazz club. Would a future film with a cameo of Paris be subject to the full tariff or a partial one?

And would a distinction be made between films about Americans abroad and other movies with storylines set in the US but filmed outside the country to keep costs down? The Mission Impossible films are filmed in the foreign countries where the American spies operate. In contrast, the movie Chicago was filmed in Toronto, where Canadian tax credits and subsidies keep costs down. 

Then, there is the line between movies and TV shows (like Emily in Paris), which the president has not (yet) targeted for tariffs. Why would films be targeted for tariffs, but TV shows be exempt?

Hurdle 2:    How much would the tariff be?

Though a 100-percent tariff sounds like a sure showstopper, its impact will depend in large part on the accuracy of the US Customs and Border Protection agents’ estimate of the film’s value, which would establish the import base. Determining the value of a film—as with other types of art—may be controversial.

One challenge is that movies are often leased or licensed—rather than bought—by distribution companies, which then deal with the theaters and streaming services. Movie distribution fees are typically either up-front payments or a percent of the film’s box office.

The tariff assessment rules for leased and licensed goods are complicated, especially when there are no comparable goods (as would be the case for many films).  A relatively straightforward approach would be to apply the tariff to the total of the lease and licensing fees, payable over the span of a long-term contract. 

For several reasons, however, those fees may not reflect the true value of the film, which can depend on hard-to-predict factors, such as critics’ reviews, word-of-mouth recommendations, the impact of weather and economic conditions on theater ticket sales, and the potential for a film to become a classic (like It’s a Wonderful Life).  

A related challenge is the phenomenon known as “Hollywood accounting”—when studios overstate a film’s costs to reduce the amounts paid to actors who take a cut in salary in exchange for a share of the net profits. If savvy distributors adopt similar strategies in their dealings with foreign film producers, a tariff on leases and licensing fees, even at 100 percent, might not stem the flow of foreign-made movies.

Other tariff avoidance strategies seem plausible, given the uniqueness of movies. Could simply uploading movies to online platforms circumvent US tariffs?

Hurdle 3: Are tariffs on movies legal?

Beyond challenges to the administration’s power to impose tariffs related to a national emergency, which the Supreme Court will hear today, tariffs on movies raise a unique set of legal questions. The Berman amendment states the president cannot impose sanctions, even in national emergencies, on information—including movies. However, legal experts differ on the applicability of the amendment to tariffs on films. 

Separately, the World Trade Organization has imposed a moratorium on custom duties on digital services and places through March 2026.

Many movies depict thrilling courtroom scenes, but a real-life legal drama could break out if a tariff is imposed on foreign-made movies.

The future of movies

Whether a tariff on foreign-made movies would result in more film production in the US remains an open question. Given the dependence of US studio-backed productions on foreign audiences, retaliation from other countries is a real concern. And even if the flow of imports ceased or more productions returned to the US, movie viewers may give a thumbs down to fewer or different film choices.