Few businesses are truly immune to US president Donald Trump’s slate of tariffs, given their potential impact on global economic growth and international supply chains. For media businesses, perhaps the most obvious potential consequence was a reduction in ad spend, if brands cut their marketing budgets in order to reduce total costs.
That was, at least, until Trump’s announcement on his social platform Truth Social this weekend that he intends to impose a 100 percent tariff “on any and all movies coming into [America] that are produced in foreign lands”. Trump paints the tariffs as a response to incentives offered in various other markets which are designed to attract film studios to create movies in those markets.
The announcement raises a lot of questions. Given the international nature of film production, what will be the criteria used to decide which films count as US-made? How will this tariff be extracted? Will tariffs come for TV production too, since the same factors cited by Trump are at play in TV production? Will the film tariffs actually come to pass at all?
With so many unknowns, the full scale of the impact is currently unclear. But given that films are a core part of many broadcaster-owned streaming services’ streaming offerings, and the fact that many broadcasters produce and/or distribute films themselves, there will be major implications for the broadcast sector.
Hit on studios and commission rebalancing?
To start, many of Europe’s major broadcasters own production studios which create and sell films internationally. Some are more focussed on film than others. Channel 4’s Film4 Studios for example only makes films, since the broadcaster has historically been banned from creating its own TV shows. The likes of ITV Studios and RTL Group’s Fremantle meanwhile are more focused on TV production, though this includes made-for-TV films. TF1 Studios, in a case of seeming unfortunate timing, just last month announced plans to double its film output, with a particular focus on the US market.
For these broadcasters, selling films for US distribution will become much more difficult, restricting access to a key market. Philippa Childs, head of creative industries trade group Bectu, said the tariffs “could deal a knockout blow” to the UK film industry. This is particularly problematic for broadcasters who have leaned on their studio divisions to stabilise overall group revenues as ad revenues have stuttered.
Again, the impact will depend in part on implementation. Some European broadcasters own studios or have offices in the US, so it may be that at least some of their film output might be shielded from the tariffs.
Implementation is particularly hard to predict when it comes to how the tariff will actually be extracted. Films obviously aren’t physical goods, so they can’t just be taxed as they enter the US based on their price. It could theoretically be applied to cinema ticket prices, but that would miss out films which are run directly on streaming services (and therefore presumably encourage more filmmakers to skip the cinema and go straight to streaming).
It seems likely that to some extent, tariffs would raise the prices which streaming services pay for foreign-made films — whether they pay solely for new productions made outside the US, or if the tariffs go even further and apply to all non-US films regardless of age. This would give US-serving streaming services a tough choice: shift almost entirely to US-made films, slashing the size of their film libraries, or bear the higher costs and try to pass them on to consumers (who have already been hit by multiple price rises from most services over the past few years).
US-based streaming services might also have to undergo a bit of a strategic rethink. Ultimately, the ability to take content created for one market and distribute it internationally has been key for the big international streamers. Netflix is an obvious example — it’s invested heavily in films and shows created in non-US markets which it has used to grow in those markets, while also distributing that content to US subscribers. It might make sense, so long as the US tariffs apply only to films, for companies like Netflix to focus these efforts even more heavily on TV production.
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