Shares of entertainment companies including Disney, Netflix, Warner Bros. Discovery and Paramount Global took a hit Monday as investors assessed Hollywood’s potential exposure to President Trump’s as-yet undefined vow to impose a 100% tariff on foreign-produced films.
At the open of the U.S. stock market regular trading Monday, Netflix’s stock was down -3.3%, Disney was -2.4%, WBD was -4.2% and Paramount was -2.2%. Shares of Lionsgate Studios slipped more than 7% in early trading. The declines were steeper than in broader market indexes like the S&P 500 (-0.70%) and the Nasdaq Composite (-0.82%).
On Sunday, the U.S. president wrote on his social media platform Truth Social, that other countries are offering “all sorts of incentives to draw our filmmakers and studios away from the United States,” a “concerted effort” by those nations that represents “a National Security threat.” Trump said he is authorizing the Commerce Department and the U.S. Trade Representative to “immediately begin the process of instituting a 100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands.”
SEE ALSO: Movie Industry Shocked and Confused After Trump Says He’ll Put 100% Tariffs on Films Produced Outside the U.S.: ‘This Is Nuts!’
When Trump launched his sweeping “reciprocal” tariffs initiative in early April, analysts said Hollywood would not be directly impacted since those tariffs (as is historically the case) applied to physical products and not intellectual property. Now, it seems, Trump is poised to extend his global trade war in a way that would add significant costs to the movie industry.
At this stage, there are more questions than answers about Trump’s movie tariffs threat. For example, Tom Cruise’s “Mission: Impossible – The Final Reckoning,” distributed by Paramount Pictures, was filmed primarily in the U.K. It’s unclear whether the movie, which opens May 23, would be subject to new levies — or, more broadly, exactly how any such tariffs would be assessed.
Many movies are shot and produced in multiple countries, including in the U.K., France, Germany, Hungary and Canada. Currently, it isn’t known how the Trump administration would define what constitutes a foreign-produced film. It also is not clear whether Trump would seek to extend levies to TV productions.
In a research note Monday morning, Morgan Stanley media analyst Ben Swinburne said that “With only a single social media post to go on,” it is “virtually impossible to size the impact to the industry or specific companies today.” He added that a 100% tariffs on “some or all of the cost of a film (or a TV show?) would lead to fewer films, more expensive films, and lower earnings for all in the business.”
Netflix produces more films than any other studio today, with film representing 25%-30% of total viewing on the platform in 2024, according to Swinburne. “The reality is that for any given film, there can be writing, production, editing, post-production, visual effects — all done in different countries,” the analyst wrote. “Retaliatory tariffs are an add’l risk — it might give foreign govts an incentive to tax or block US streaming services and/or film releases.”
It’s worth noting that Mel Gibson, who is one of the three Hollywood special ambassadors appointed by Trump (alongside Sylvester Stallone and Jon Voight), is currently planning to shoot his “Passion of the Christ” sequel in Italy.
According to the Motion Picture Association, the American movie industry in 2023 had $22.6 billion in exports and an overall $15.3 billion trade surplus. Hollywood generated a positive balance of trade with every major foreign market, per the MPA.
