Trump's foreign film tariff: Legal drama meets industry doubts

 President Trump announced on social media his intent to impose a 100% tariff on films produced overseas, framing it as a national security measure to "Make Hollywood Great Again." He claimed foreign governments had "stolen" U.S. moviemaking jobs with generous subsidies and that films from abroad constituted propaganda. While no final decisions have been made, this announcement has left the industry debating what the end game might be.  

The proposal immediately drew confusion in Hollywood. Without clear criteria, filmmakers cannot predict how the tariff would work and which "piece" of the film would be taxed. If a film is structured as a U.S. coproduction with a foreign country, would that qualify as being a U.S. film? If a foreign film is exploited under a domestic distribution deal, customarily including the U.S. and Canada territories, is only the prorated revenue on the U.S. portion of that deal taxed? Further, legal experts warned that taxing foreign films to this degree could invite retaliation from foreign countries, which would negatively impact a film's ability to generate revenue from foreign sales.

Legal authority and constraints

The specific mechanics of the tariff proposed by Trump are still unclear, including whether he has statutory authority to implement such a tariff under Section 232 of the Trade Expansion Act, Section 301 of the Trade Act of 1974, or the International Emergency Economic Powers Act (IEEPA). California also notes that IEEPA does not mention tariffs and that no previous president has claimed such power. In short, any tariff implementation would immediately face numerous legal challenges as to its validity.

Alternative proposal: Voight's industry plan

Because of the complexity of an overarching 100% tariff--and perhaps reflecting the outcome Trump's advisors intended from the start--an alternative emerged from Trump's own circle. Actor Jon Voight - a newly appointed "special ambassador" to Hollywood - met with the President at Mar-a-Lago and presented a draft plan to "rescue" the film industry. Voight and his adviser, Steven Paul, shared a proposal calling for federal incentives rather than pure tariffs. The draft envisions a new 10% federal tax credit for all domestic film and TV productions, stackable on top of existing state credits, and coupled with an "American cultural" content test. Voight also suggested international coproduction treaties and subsidies for theaters and production companies as a way to give U.S. production a competitive edge. For those seasoned in international film financing and coproduction structuring, this proposed plan looks very familiar to other countries (e.g., UK, Ireland, Spain, Australia) currently attracting film production business and implementing similar incentives. Voight's approach shifts focus to attracting production back to the U.S. with inducements. A federal tax credit was warmly received by many in the industry as international "runaway production" is the product of simple economics - creating something for the least amount possible in order to make the most amount of revenue. For years, many have communicated their desire to work in the U.S., but it has simply not been a good business decision. An effective implementation of credits allowing industry professionals to stay close to home and fuel local economies sounds like music to the ears of many who find themselves far from home for months at a time.  

While Voight's plan seems more tenable and palatable, a federal credit would still require legislative approval, which would undoubtedly raise questions surrounding federal authority. That said, it seems more plausible than the tariff implementation. Tax credits and co-production agreements have precedent -- the U.S. once negotiated film coproduction treaties with Canada and others. Because it would be a positive subsidy (not a punitive levy), it raises fewer international-trade red flags, mitigating the risk of retaliation.

Newsom's federal tax credit initiative

California's government has also proposed using incentives to boost domestic film production. On May 6, 2025, Governor Newsom announced a plan for a $7.5 billion federal tax credit program. State legislators and Congressmembers, including Democrats who sponsored California's own credits, uniformly signaled their belief that incentives (not tariffs) are the right tool. Newsom's proposal, if enacted by Congress, would directly channel subsidies to U.S. shoots and crews. Industry reception to the credit idea has been positive in general - although details would matter. Studios and unions have already expressed conditional support.

Economic and cultural impact

California's independent film sector stands to be particularly affected by any tariffs. Indie producers often rely on international coproductions and foreign financing (e.g., through Canadian or European funds) and festival/streaming distribution abroad. A punitive tariff could chill these foundational ties. Higher production costs and barriers to foreign funding might cause projects to be scaled back, relocated or canceled. California-based independent filmmakers could lose access to overseas expertise and incentives.

Nationwide, the tariff would likely raise U.S. production costs by minimizing profit margins. The long-term effect of this is uncertain as industry leaders would certainly find a way to course-correct or risk complete devastation of an already depressed industry. In the short term, a slowdown in greenlighting new projects is almost a certainty.

Meanwhile, a federal tax credit would inject a known sum into the economy. Though large ($7.5 billion or more), it would be a targeted stimulus for Hollywood, likely creating jobs in set construction, post-production, VFX, etc. It could spark spin-off spending in local businesses. Producers have long said that credit programs (like California's existing $330 million annual credit) successfully lure films to invest in-state but are notoriously underfunded. For example, it is well known that if you do not apply for the California credit the instant the application becomes available, you have all but forfeited your chance at receiving it because it is always almost instantly allocated at the top of the year.

Conclusion

Trump's film tariff proposal has stirred urgent debate in the midst of significant speculation, but its implementation is fraught with legal and logistical barriers. In the meantime, alternatives like Voight's draft plan and Newsom's tax-credit initiative have taken center stage in policy discussions. These proposals emphasize incentives and coproduction treaties over trade warfare. They, too, face hurdles (funding, design), but appear legally and economically more viable. For California and Hollywood, the sole focus should be on how to keep the U.S. film industry competitive in a global market.