Getty Images / picture alliance / Contributor
TAKEAWAYS KEY
- On Sunday, President Donald Trump announced that he had authorized a tariff of 100% on films made abroad.
- The news stunned the movie industry and the media giants. Trump’s trade policy now extends beyond the importation of goods. In a Truth Social blog post published on Sunday, Trump called tax incentives that encourage the production of American films overseas a threat to national security.
- Early trading was impacted by the announcement, which hit shares of media titans like Disney and Netflix.
Donald Trump announced on Sunday that he had authorized a tariff of 100% on movies produced overseas. This surprised the movie industry as well as media giants, who were unaware that he was extending his tariff war beyond the levies imposed on physical goods imported into the country.
The announcement by the president, made on his Truth Social Platform, hit shares of media titans like Walt Disney Co., (DIS) and Netflix, (NFLX), early Monday morning. Disney shares, due to report quarterly results this Wednesday, are trading down 2% while Netflix shares are trading 5% lower.
In a Truth Social post published on Sunday, President Obama called tax incentives for American movies to be produced overseas a threat to national security and said that tariffs would immediately apply to all movies made in “foreign countries”. Many American movies and television shows are produced in Canada and the U.K. both of which offer tax benefits, among other places.
“The Movie Industry in America DYES a very rapid death,” Trump said. “Other Countries offer all kinds of incentives to lure our filmmakers and Studios away from the United States.” Hollywood and other areas of the U.S.A. are being destroyed.”
“WE WANT MOVIES MAD IN AMERICA, AGAIN!” In his post, he concluded without naming specific companies.
Netflix and Disney didn’t respond immediately to requests for comment. The announcement was reportedly a surprise to industry executives, in part because it wasn’t clear what the tariffs would include.
The movie industry "generated a positive balance of trade in every major market in the world," according to the Motion Picture Association latest economic impact report.
