President Trump revived his idea for a 100% tariff on foreign-made movies on Monday — and this time, he made it sound like he’s really going to do it.
Back in May, he said was “authorizing” such a tariff. On Monday, he said he “will be imposing” it.
Not unusually for Trump, that leaves many practical and legal questions unanswered. Hollywood is preparing to release a series of major films that were produced overseas — “Tron: Ares,” shot in Vancouver; “Wicked: For Good,” shot in London and Cairo; and “Avatar: Fire and Ash,” filmed partially in New Zealand.
Will they be tariffed? Who knows.
Here are a few hurdles in the way of turning a Truth Social post into an actual policy:
Figuring Out What to Tax
Most countries that regulate in this area do so with quota systems — either limiting the number of foreign films allowed into the country, or requiring theaters to screen a minimum number of domestic films.
Imposing a tariff would require figuring out a transaction to tax. U.S. studios that produce films overseas don’t “import” them back to the U.S. through ports of entry for a set price. Films are produced and edited across territorial boundaries. So imposing a tariff would require imputing some sort of price to the foreign-made portion of the film.
The draft version of the “Jon Voight plan” that circulated earlier this year called for a 120% tariff on the amount of subsidies received to shoot abroad. So, if a production received $50 million from provincial and federal subsidies in Canada, that production would be hit with a $60 million tariff. At that level of taxation, the policy would obviously look more like an embargo than a tax, since it would effectively shut down that form of economic activity.
A simpler option would be to impose a movie ticket tax on foreign-produced films, or a tax on domestic box office revenue for films produced overseas. But that isn’t what Trump has proposed.
Finding Legal Authority
Trump has imposed many of his second-term tariffs under the International Emergency Economic Powers Act of 1977. But that law includes a specific carve-out that makes it inapplicable to foreign-made films.
In August 2020, Trump invoked IEEPA to effectively ban TikTok in the U.S. But a district judge quickly granted an injunction blocking the order from taking effect, finding it ran afoul of the “informational materials” exception. That exception — called the Berman amendments — explicitly prevents the government from using IEEPA to regulate the importation of films, music, artwork, news accounts, and other such content. Presumably, a similar injunction would issue if IEEPA were used to justify a movie tariff.
Trump could also try to invoke Section 301, which confers powers to combat unfair trade practices, or Section 232, which applies to national security situations. That would likely also lead to legal challenges on First Amendment grounds or other bases.
Lack of Political Support
It’s no exaggeration to say that no one in Hollywood wants this. The Hollywood unions are very concerned that film production has fled overseas. But their solution is a U.S. federal subsidy to counter the subsidies offered by the U.K., Canada, and other countries. (Some Democratic lawmakers are working on that idea, so far without getting much traction.)
Theater operators, who are struggling to stay afloat post-COVID, would be adamantly opposed to tariffs on tickets. Audiences are also not clamoring to pay more for movie tickets.
Political sentiment can constrain government action. Just last week, the Federal Communications Commission backed down shortly after making threats against ABC affiliates that led to Jimmy Kimmel being taken off the air for a few days. The groundswell of opposition to that sort of open aggression even included Republican senators. So while the FCC still could pursue complaints against ABC affiliates or take other actions, its bluff has been called.
The same could happen here, well before any of the chaos that might ensue from actual implementation of the policy.
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