Hollywood horror sequence: What looks like protection could lead to dejection in America’s film industry

Even though foreign films are hardly any competition to Hollywood fare in America, the question remains, what exactly constitutes a ‘Made in USA’ film? It’s like asking what characterizes an American cheeseburger. Is it the bread, the mince, the cheese or the patty flipper in the kitchen?

Modern film production pipelines are a confluence of talent and processes from far and wide across the world. The $2.8 billion-earning Avengers finale, adapted from US comic books, features American Chris Evans as Captain America, Australian Chris Hemsworth as Thor, Canadian Evangeline Lilly as Hope van Dyne and Briton Karen Gillian as Nebula.

The film was shot in Georgia, New York, Scotland and England. Thousands of visual-effects (VFX) shots were put together in a dozen VFX studios in India, Canada, New Zealand and elsewhere. If Trump’s tariff is applied to anything with foreign fingerprints, then good luck finding a single blockbuster that doesn’t qualify.

Another wrinkle is presented by foreign stories. Amazon subsidiary MGM Studios owns the quintessentially British James Bond franchise. Agent 007 reports to MI6 (not Langley), which takes him to London, Scotland or wherever the next villain’s lair is. Such franchises with foreign elements would wonder if Bond needs to change his shaken martini to a stirred bourbon Coke to dodge the tariff.

In my company, almost all productions are stitched together with international production incentives and talent pools in mind. Canadian tax credits, Indian production incentives, low-cost Eastern European labour, location sweeteners and more go into a film’s production plan for it to be produced at the right price and on schedule, with many teams working in parallel.

Borderless filmmaking helps studios shave millions off budgets that keep mega movie spectacles profitable. A US film tariff wouldn’t punish foreign productions even a fraction as much as it’d punish the American studios that rely on overseas work to keep cinema tickets for, say, Avengers at $15 apiece instead of $50. Declaring such films ‘foreign’ would be like insisting that a cheeseburger isn’t American if its lettuce came from Mexico.

Studio accountants might already be working on models to produce films entirely overseas to cut budgets by half. A 100% tariff on those would still prove cheaper than films fully made in the US.

Then there’s the puzzle of tariff collection. On what exactly will it be levied? Movies do not pass through port customs; they are digitally delivered. One way would be to double ticket prices at the box office, punishing moviegoers directly. But what happens when Netflix drops a Bollywood film whose contracts were signed in India but is meant to be streamed worldwide? Would Netflix be expected to double its subscription fee? Or will it be asked to share viewership data with tariff enforcers to calculate how many were US eyeballs?

Don’t even get me started on YouTube. Would an indie French filmmaker uploading her film from Paris now need to fill a customs form on the authoring platform?

Strangely, the policy completely ignores series content. In 2009, George Lucas released Clone Wars. Produced largely in Singapore and Taiwan, this Star Wars title was released both as a theatrical feature and a series—quite the test case for this tariff. Progressively, GenAI, which is here to stay in showbiz, will make it even harder to ascertain the actual point of origin of content generated on a distributed network of computers in data centres spread across multiple countries.

Whoever in the Trump administration is tasked with administering this new tariff—should he or she choose to accept the task—would face a near ‘mission impossible.’

To be fair, the idea of protecting domestic content is not uniquely Trumpian. France forces every broadcaster and streamer to meet French content quota requirements. Canada has ‘CanCon’ rules that largely block out foreign content in the name of Canadian culture preservation. China simply limits the annual number of foreign films that play in its theatres.

All these are trade barriers that aim to protect domestic content industries but only weaken production houses. Recent relaxations in Canadian restrictions devastated many indie producers that had never needed to compete globally. The reason US content is so influential worldwide is that success in the US demands extreme excellence and competitiveness. A protective tariff could slowly weaken Hollywood studios.

While some could justifiably argue in favour of this new tariff, implementing it with any degree of coherence would require a massive overhaul of laws, a big rethink of international trade commitments, new processes at the US Internal Revenue Service and a whole audit industry that specializes in scrutinizing film and TV consumption.

Maybe there’s divinity in the fine print, which is yet to be released. If America’s recent H-1B visa changes are any example to go by, it could very well be a bold trailer for a film that fades away soon after its opening weekend.

Hollywood is the reason that American films are consumed worldwide like cultural gospel. Global talent pools strengthen its movie pipelines. And no candy gets stolen from a baby.

The author is founder and CEO, August Media Group.