Wrong Solution, But Real Problem

Don’t tell anyone I said this, but President Trump is right. There is a dire situation facing Hollywood with the decline of locally produced TV and film and it is entirely legitimate for the government to be concerned and seek to ameliorate this. Unfortunately, the initial indications of Trump’s proposed new tariff regime will do little or nothing to alleviate the concerns of producers, talent, and production staffers not to mention consumers.

If you missed the President’s social media posting among the flood of daily news barrages, he suggested a 100% tariff on all film production outside of the U.S. According to Trump “”WE WANT MOVIES MADE IN AMERICA, AGAIN!” (Caps not added by me). Apparently, this grew out of a Mar-a-Lago dinner with Jon Voight and his manager. Jon Voight is as legit a movie star as we’ve had in the last 50 years, but I don’t think I want him driving global economy policy.

Meanwhile, the President appears to have walked this back somewhat, saying he wants to speak to the industry first to “make sure they’re happy.” Umm…they’re not. And of course, the late-night talk show universe had a field day, with Jimmy Kimmel noting that “The White Lotus is gonna be set next year at a Hampton Inn.”

On a more serious note, concerns about the infrastructure of the Hollywood production community are real and have been the subject of in-depth reporting for some time. Covid-19 shut down production for a time in 2020, and health protocols added time and expense to productions once they resumed. Long-pent up frustrations with the shifting economic models in the business led to painful strikes by writers and performers, further halting production and bringing significant financial consequence for both union members and studios. The devastating fires in Pacific Palisades and Altadena left thousands of TV and film professionals homeless and added yet another blow to production schedules.

Of course, the most consequential threat to the traditional home of TV and film production is the dramatic upheaval in the foundational business models for U.S. TV and film. Beginning in 2007, when Netflix began streaming, Google purchased YouTube and Fox, NBCUniversal and Disney launched Hulu, the TV business has never been the same. Cable subscriptions are more than 30% lower than they were 10 years ago. Even in streaming, Peak TV peaked several years ago. Movie theater attendance held up for years but is now significantly below where it was before Covid and the accelerated shift to streaming. Consumers, especially younger ones, spend their time with TikTok and its social media brethren rather than pouring over the TV Guide or Fandango theater listings.

In the face of all of these blows to TV and film revenue outlets, the industry has looked to cut costs. Its primary modus operandi has been to move productions abroad, especially to Canada, Ireland, and a host of other international destinations (I don’t think The White Lotus falls into the “money saving” category, however). Toronto and Vancouver often stand in for Boston, Chicago, and New York. Within the U.S., states such as Georgia, New Mexico and others have offered significant tax incentives for productions to move away from greater Los Angeles.

So here comes the President. So many questions before we can even start to digest this. Putting aside whether the Trump Administration would be bothered by this question, would tariffs on film and TV production be legal? TV and films are legally categorized as intellectual property and a service, so not traditionally subject to tariffs. Trump has declared the challenge to the film business to be a “National Security” concern, but this seems a stretch especially when some of the production moves are inside of the U.S. It reminds me of when I worked on Capitol Hill and there was much sturm and drang about the Japanese “taking over” the film business when Sony and Matsushita bought Columbia and Universal Studios. That didn’t go far, and I don’t see a national emergency argument forcing the next James Bond film to be shot in Encino.

How would this work? Do you collect tariffs from U.S.-based studios like Disney, Warner Bros. Discovery and Paramount? Independent producers? Movie theaters that show these films? Netflix and the platforms that stream them? Consumers at the box office and on their monthly cable and streaming bills?

The biggest problem of course with tariffs is that they simply increase the cost of production for everyone without addressing any of the underlying challenges facing the revenue side of the business. Hollywood filmmakers and California lawmakers have continued to wrestle with new forms of tax incentives to make film production less burdensome, not more. Raise the price of producing TV and films and no matter how you slice it, production levels go down. That’s bad for literally everyone who makes or consumes content.

So, government should stay out of this right? No. A thoughtful, seriously engaged effort among the production community, streaming platforms and government officials looking to protect employment could be legitimately helpful. But this sounds like a potentially lengthy, carefully considered, and above all collaborative process. The Trump tariff regime from its start carries none of those descriptors.