Away from the focus on Hollywood there has been a proposal to establish an enormous tax on movies made outside of the United States. Detailing the proposal on his social media account, this plan would place a 100% charge on films made overseas, potentially broadening punitive trade actions to apply to the entertainment industry for the first time and affecting how Hollywood operates.
The proposal, expressed on the platform of choice for wannabe civil rights leaders everywhere, has few specifics at this point. By way of illustration, it is still unknown what the proposed duty would mean for a film shot in a foreign country and then edited in the U.S. But this scenario describes a large chunk of contemporary Hollywood. The proposal also fails to mention global streaming content days produced and initially targeted only for foreign audiences but available in the U.S., accounting for a large portion of the streaming output and impacting Hollywood’s global competitiveness.
Reasons Hollywood Is Losing Supply of Overseas Production United States
Studios are increasingly making more projects in places like Canada, New Zealand, and the United Kingdom , mainly due to better economic conditions. All this gives Hollywood a run for its money, as these countries provide appealing financial incentives and less rigid labor laws. On the other side, production within the U.S. is a bit more expensive lately due to domestic labor unions gaining better terms for their members. That rising cost of production is also one of the key drivers of many shoots picking up and leaving traditional bastions like Los Angeles and trying out other markets like Georgia and New Mexico, putting pressure on Hollywood’s long-held leadership.
Hollywood’s Pricey Woes: Separating Industry Interest From Domestic Production
Mark your calendars, America: it seems that your city may now, politically, be Hollywood. Many producers and execs have been opining for shooting more in the U.S., specifically in the traditional heart of Hollywood (i.e., California). However, this preference is dependent on lower production costs. The statement about potential tariffs does not address domestic costs and doesn’t even proffer any potential incentives to lower production costs in the States, which will likely be important for Hollywood’s future.
Hollywood Groups Call for Incentives for Domestic Production
Jon Voight and his manager, Steven Paul, have been vocal advocates for federal incentives for Hollywood to produce more film and TV in the U.S. and become more economically competitive.” This incentive would be above state-level incentives already available and would likely be transferable.
The pair, along with Mr. Paul’s business partner Scott Karol, is said to have discussed such incentives over the course of the weekend. Then, shortly after, the proposal about taxing foreign production appeared in the news. It emphasized tariffs, a tactic often used in trade negotiations.
May Inspire Foreign Backlash Against Hollywood Products
The use of tariffs on international film and television production has the potential to trigger a tit-for-tat response from other nations. Even with much of its physical production done abroad, the U.S. entertainment sector now enjoys a trade surplus with every market in the world, per Motion Picture Association data, a testament to Hollywood’s extraordinary export muscle.
This trade association states in a report that the U.S. entertainment sector’s exports are over three times as high as its imports. There was not even a single foreign language film to pull in the North American dollar in 2023, with none of this fare making it among the 50 highest-grossing films in the U.S. during the year. Significantly, of the global top 10 films at the box office at that time, all 10 were released by U.S.-based studios, underscoring Hollywood’s continuing global hegemony.
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Other Key Insights
Simply put, Hollywood makes a lot of money selling its products abroad. Most features get their largest portion of revenue from international sales, and streaming entertainment platforms such as Netflix, Disney+, and Amazon are making films for global audiences in dozens of markets, starting with the United States. Such a global strategy is at the heart of many of the larger entertainment corporations.
Even as one major international market has previously taken steps to restrict foreign films as a result of historic trade measures, this market has also very recently permitted the release of many U.S. features, indicating a certain temperance in such restrictions. Whether this market will see even tighter limitations or other regions will be inspired to apply tariffs on U.S. films or streaming services is anyone’s guess.
Recently, high-profile experts from the entertainment sector have been designated special ambassadors to look into supporting the film and television industry.
This would be a major change that aims to change Hollywood domestically and abroad, as tariffs on foreign filming would certainly do. People must watch what this means for production costs, international trade relations, and the global footprint of entertainment distribution.
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