The 100% Tariff Chaos: Trump's Movie Industry Shakeup 🎬

KeepCart: Coupon Protection partners with DTC brands like Quince, Blueland, Vessi and more to protect your checkout from plug-ins like Honey, CapitalOne, RetailMeNot, and more to boost your DTC margins

Overpaid commissions to affiliates and influencers add up fast – Get rid of the headache and revenue losses with KeepCart.

After months of using KeepCart, Mando says “It has paid for itself multiple times over.”

Now it’s your turn to see how much more profit you can keep.

Try it 2 months free, only in September (email us SEPTMARGIN) – No risk, Cancel anytime.

There's a question that's been bouncing around Hollywood offices for the last 24 hours: How exactly do you impose a 100% tariff on something that gets transmitted digitally and doesn't go through any ports?

President Trump announced Monday he's imposing a 100% tariff "on any and all movies that are made outside of the United States." 

He didn't specify when or how the tariff could be enacted, and that vagueness is causing absolute chaos in production offices from Los Angeles to London to Mumbai.

This isn't the first time, though. Trump initially threatened this same 100% tariff on foreign-produced movies back in May, arguing that other countries offer tax incentives that have drawn filmmakers abroad. 

But this time, the announcement came with renewed focus on California specifically.

The industry response ranges from confusion to panic to dismissal, but the numbers behind global production tell a story about why this matters, even if nobody knows how it would actually work.

To understand why Trump is making this move, you need to see what's been happening to Hollywood production over the past decade.

The United States saw $7.2 billion in production spending on 216 projects in the first half of 2025, according to industry tracker ProdPro looking at projects with budgets greater than $10 million.

That sounds substantial until you realize what percentage of "Hollywood movies" are actually being shot in Hollywood. 

Industry sources estimate that 60-70% of major studio productions now shoot significant portions outside the US, primarily in:

A $100 million blockbuster shooting in Georgia (with its 20% tax credit) versus the same film shooting in Vancouver (with 35% rebates) represents a $15 million swing in net production costs. When you're making 10-15 films per year, that's $150-225 million in savings.

Studios have been choosing the math over the patriotism for years.

It's unclear how these tariffs would operate, since movies and TV shows can be transmitted digitally without going through ports.

Industry lawyers and trade experts are genuinely confused about the implementation. Traditional tariffs work on physical goods crossing borders - customs officials can inspect, classify, and tax them. Movies don't work that way anymore.

So there are tons of questions:

- What gets taxed? Is it the production cost? The distribution revenue? The streaming licensing fee? The box office gross? Each creates wildly different economic impacts.

- Who pays? The studio? The distributor? The theater chain? The streaming platform? The consumer through higher ticket prices?

- What qualifies as "Made Outside the US"? If 30% of a film is shot in Canada but 70% shot in California, what happens? What if it's an American studio with American financing but foreign locations?

- How do you enforce it? Customs can't inspect digital files. Do streaming platforms report what they licensed? Do theaters declare where films were shot?

Even if it were based off profits, the tariff would likely lead to higher ticket costs, licensing fees and at-home sales. A tariff on production costs would have a more limited impact, especially if it only applies to the portion spent outside the US, but would still increase costs.

For major studios with global production slates:

• Disney/Marvel films often shoot 40-50% internationally
• Warner Bros relies heavily on UK studio facilities  
• Netflix has massive international production infrastructure
• Amazon produces significant content in multiple countries

If the tariff applies to production costs, a studio spending $3 billion annually on international production could face $3 billion in additional costs. If it applies to distribution revenue, the numbers get even more chaotic.

The numbers back this up. California's film and TV production has been hemorrhaging for years:

• Production days in LA down 40% from peak
• Studio infrastructure operating at 60-70% capacity
• Below-the-line jobs (crew, technicians) down 30% from 2019
• Multiple sound stages converted to other uses

California's production incentives ($330 million annual cap) are dwarfed by what other locations offer. A $100 million film could save:

• $35 million shooting in Vancouver
• $30 million shooting in London  
• $25 million shooting in Georgia
• $20 million using California incentives

The math is brutal, and studio CFOs have been following it for a decade.

- California Production Infrastructure: Sound stages, equipment rental, crew services could see renewed demand if production moves back.
- US-Based VFX Houses: Foreign post-production work might become less attractive.
- Domestic Film Commissions: States with existing incentive programs gain leverage.
- Streaming Platforms: If tariffs apply to theatrical but not streaming, it could accelerate the theatrical decline.

- International Production Hubs: Canada, UK, Australia's entire film industries built around Hollywood outsourcing.
- Studio Bottom Lines: Either through paying tariffs or through higher US production costs.
- Global Co-Productions: International financing partnerships become more complicated.
- Consumers: Higher costs likely mean higher ticket prices and subscription fees.

India's growing role as a Hollywood production location (for films like Extraction, Mission: Impossible) could be significantly impacted. If the tariff applies to any foreign shooting, it kills location arbitrage completely.

While Hollywood executives are confused, Indian producers targeting US distribution are facing an existential question as well: does their entire business model just become unviable overnight?

Indian films generated $337 million in overseas box office collections in 2023, with North America being the second-largest market after the Middle East. 

For context, India's total film industry was valued at ₹19,700 crores ($2.36 billion) in 2023, projected to hit ₹23,050 crores ($2.76 billion) by 2024.

The US market represents roughly 15-20% of total overseas revenue for major Indian films. That's significant, but not catastrophic for established Bollywood. For new production companies targeting the diaspora market, it's everything.

• Production budget: $2-5 million (₹17-42 crores) for mid-budget film
• US theatrical distribution costs: $500K-1.5 million for limited release
• Target US box office: $3-8 million for diaspora hit
• Break-even after distribution costs and revenue shares

• Same production and distribution costs
• If tariff applies to US box office gross: $3-8 million becomes $1.5-4 million net
• Suddenly underwater on most realistic scenarios
• Requires 2x box office performance just to break even

• $2-5 million production cost triggers $2-5 million tariff
• Total investment doubles to $4-10 million before distribution
• Need $10-15 million US box office just to recoup
• Only blockbuster diaspora hits (Pathaan, Jawan level) make sense

The Indian diaspora market in North America has been growing steadily, with major releases now regularly grossing $10-30 million but that growth was built on specific economics that a 100% tariff completely destroys.

Major Indian films work with specialized distributors:

• Yash Raj Films operates its own US distribution
• Eros International partners with major chains
• Reliance Entertainment has direct theatrical relationships
• Smaller films go through diaspora-focused distributors

These distributors operate on thin margins - typically 15-25% of gross after theater shares. A 100% tariff that applies before their cut makes most films immediately unprofitable to distribute.

AMC, Regal, and other chains showing Indian films in 100-300 US locations have been expanding this business. If tariffs apply to the distributor's revenue share, chains might see reduced bookings as distributors pull back. If tariffs apply at the theater level, chains might stop booking Indian content entirely.

• Pathaan (2023): $56 million North America gross
• Jawan (2023): $38 million North America gross  
• Kalki 2898 AD (2024): $30+ million North America gross
• Pushpa 2 (2024): $60+ million North America gross (still in theaters)

Under a 100% tariff, these become $28M, $19M, $15M, and $30M respectively - still profitable for massive hits, but mid-tier films ($5-15M range) become economically questionable.

• Companies like mine (Mugafi) targeting US theatrical market might need immediate strategy pivot
• Mid-budget diaspora films ($2-10M) become economically unviable under most tariff scenarios
• Streaming-first US distribution strategies become the only realistic path
• Co-production structures with US entities might offer tariff avoidance (if structured correctly)

• Immediate uncertainty freezing some international production decisions
• Scramble to accelerate shoots before any implementation
• Renewed interest in US locations with strong incentives
• Need contingency budgets for multiple tariff scenarios
• CFOs modeling potential 20-30% cost increases on international productions
• Strategic review of global production infrastructure investments

• India's $337 million overseas box office faces a potential 50%+ revenue hit from North American market
• Production companies targeting diaspora theatrical distribution need complete business model reassessment
• South Indian cinema's growing US footprint could be killed before it matures
• Streaming becomes the only economically viable US distribution path for most Indian content

• Production company valuations become more complex
• Real estate in production hubs faces uncertainty
• Equipment and services companies need new revenue models

Trump's movie tariff announcement is either the biggest disruption to global production economics in decades, or it's an unenforceable political statement that never materializes into actual policy. The problem is, nobody knows which.

The vagueness creates immediate chaos. Productions that were about to greenlight international shoots are pausing. Studios are running multiple budget scenarios. International production hubs are lobbying their governments to prepare responses.

What's clear is this: the global production arbitrage that's defined Hollywood economics for the past 15 years is now a political target. Whether Trump can actually implement a workable tariff or not, the industry is being forced to reckon with the sustainability of the outsourcing model.

The smart money is watching what happens in the next 30-60 days. If detailed implementation plans emerge, this is real. If it stays vague and nothing moves forward, it's theater. Either way, the fact that it's even being discussed shows how politically vulnerable the current production model has become.