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Trump’s Proposal for 100% Tariff on Foreign Films: Legal Challenges and Industry Impact
Posted on: 09 May 2025
On Sunday, May 4, 2025, President Donald Trump announced through a Truth Social post that he intends to impose a “100% tariff on foreign produced films.” Citing a number of reasons, including the state of decline of the filmmaking industry in the United States as well as his intention to curb what he says is (propaganda). Filmmaking as a storytelling medium is by its very nature an international business, with film production occurring in locations across the globe. The production and distribution of a film involves a host of different components from start to finish, and the very nature of modern film production and distribution involves teams spread across the globe, particularly in a digitized world. Legal Framework for Tariffs in the United States With this backdrop, the first question is this: How would such a tariff regime even work under current U.S. law? As the starting point of any discussion, a tariff is a tax. In the U.S. tariffs and the ability to impose them arise under Congress’s constitutional authority under Article I, Section 8 to levy taxes and regulate foreign commerce. Some of this authority has been partially delegated to the President through various statutes, including the Trade Expansion Act of 1962 and Trade Act of 1974, and the International Emergency Economic Powers Act (the “IEEPA”). The administration of tariff enforcement is handled by the U.S. Customs and Border Protection (CPB), which uses the Harmonized Tariff Schedule to guide the processing of goods imported into the United States. The enforcement mechanisms that currently exist for such imported goods are structured around the goods that are being imported being “physical goods” with a clear point of entry. Separate from the issue delegated authority to impose tariffs at all, is the question of what exactly would be subject to the tariff. Films and film rights are generally speaking intangible assets, and not physical goods, which are to which tariffs typically apply. This makes the point of “import” unclear. Added to this is a confusion about what exactly would be taxed: the production budget, box office revenue, or streaming rights, etc. None of these crucial details have been detailed by the administration. One area of significant concern is the signaling by the administration of expanding the typical scope of tariff policy beyond the importation of physical goods to that of intangible assets and services. This direction is both unprecedented and has been seen as highly controversial, and it raises the specter of other intangibles that could be the target of tariffs beyond the filmmaking industry. Possible Impacts on Filmmaking Industry The most pressing challenge currently is the lack of certainty. No clear guidance has been provided as to how the U.S. Government would tax foreign produced films in a digital world outside imposing the tax on imported physical media (i.e. DVDs, Blu-Rays, and Flim Reels, etc.) In addition, being an intangible good, the value of a film has less to do with the production costs, and instead the revenue that it generates, which makes the (“ad valorem”) and (“flat fee”) tariff regimes currently in place difficult to apply to a film. The lack of certainty alone is likely to have the negative effect of slowing or halting potential projects and investment necessary to produce films with any kind of foreign involvement whether that is a studio made feature film or a film with mid-size to low budgets. In a digital marketplace, with flows of data across borders, the current tariff infrastructure is highly limited to its ability to monitor, track, or tax at the border. Application of a tariff may be difficult to implement on a practical basis, but there are other non-tariff taxing regimes that could affect production indirectly. Possible Impacts on Online Film Distribution. Multiple countries around the world currently have some form of Digital Services Tax (“DST”), which exist in the United Kingdom, France, Italy, Austria, Turkey, and Spain among others. An investigation had been previously pursued by the United States Trade Representative (USTR) by the first Trump Administration under Sec. 301 of the Tariff Act of 1974 to investigate countries that used DST to “discriminate against U.S. Countries.” But this would be a process outside of the use of Executive Orders. DSTs typically apply to revenues of online advertising, streaming media, social media, and digital marketplaces, which would more likely affect the distribution and revenue derived from distribution than production. Many of the countries that currently provide incentive and rebate-based structures for film production also implement DSTs. Current Legal Hurdles to the Implementation of Tariffs on Foreign Produced Films. Separate from the statutory, technical and other practical limitations, there are some unique legal hurdles that would specifically apply to the imposition of tariffs on the importation of foreign produced films. There is currently a WTO moratorium on customs and duties for electronic transmissions, which has been extended through March 2026, which could pose a very specific legal barrier to the imposition of a tariff on digitally imported goods. The digital economy has blurred the line between goods and services, which complicates the imposition a tariff regime on the industry, both in production and distribution of film. In addition, the Berman Amendment to the IEEPA, passed in 1988 prohibits the president from regulating the import and export of “informational materials,” the definition of which includes films, books, and music. As intellectual property, the regulation of cultural imports face a legal challenge to implementation. What’s Next. Until the Trump Administration provides further guidance on any specific policy, any advice remains within the realm of hypothetical. But the disruption caused by the messaging is already having an effect on the film industry inside the U.S. as well as abroad. Once something more definitive is released by the administration, various players are left only to speculate on possible scenarios, and how to respond. = = = = = About Possinger Law Group, PLLC Founded in 2001, Possinger Law Group is a boutique law firm dedicated to elite levels of service to […]
Hillius v. 18 Paradise, LLP, Court Denies Plaintiffs’ Post-Trial Motions in Monday Hearing
Posted on: 25 Apr 2025
Following a hearing on Monday, April 21, 2025, Judge David Freeman denied Plaintiffs’ Petition for Further Relief as well as an earlier Motion for Release of Funds that had been pending for a few weeks. These decisions add to the losses sustained by the Plaintiffs in this case following the recent denial by the Supreme Court to take up the Plaintiffs’ case for Direct Review. At the hearing, counsel for 18 Paradise, MJ Management, and a representative for the Intervenors asked the court to bring this case to an end and to stop the continued filing of Post Trial Motions by the Plaintiffs. Bringing this case to an end in the trial court and giving the community the ability to start to heal was one of the arguments made by attorney, Ian Ducey, representing MJ Management at the hearing, and was a common theme among the other voices seeking denial of the Plaintiffs’ most recently filed post trial motion. The Court indicated that it was working with the Clerk’s Office to make arrangements for those former Homestead homeowners, who had been ordered to deposit funds into the Registry of the Court, to be able to withdraw their money. The Plaintiffs’ earlier motion to have the Court send this money to Plaintiffs’ Counsel to supervise and distribute was denied. “With the denial of these two motions, we are hopeful that this is another step towards closure in this case,” said attorney Jeffrey Possinger, who represented MJ Management at trial. The Plaintiffs’ appeal is now before the Court of Appeals (Division I), in Seattle, where Plaintiffs have recently filed a Motion for Extension of Time, requesting additional time to file verbatim reports of proceedings, despite having filed the appeal in November 2024. Despite the passage of six months since the filing of their Notice of Appeal, in their motion, Plaintiffs stated “The complexity of the appeal and the time required to identify the issues for appeal delayed the initial aspects of the case.” The parties and Homestead homeowners now have to wait for the Plaintiffs’ appellate briefing on a long list of various orders and other decisions made by the trial court, including the Final Judgment and the Court’s dismissal of the Plaintiffs’ Consumer Protection Act (“CPA”) claim. The CPA claim being the only cause of action in the case for which Plaintiffs were seeking money damages and attorney’s fees. Following nearly 5 years of litigation in Whatcom County Superior Court and a trial in May 2024, the Hillius v. 18 Paradise, LLP case continues in the Court of Appeals, while the once thriving Golf Course located at Homestead remains closed and continues to deteriorate. The final outcome for the case and the community remains undecided. Possinger Law Group represented MJ Management, O’Bryan, and Williams in this litigation through the trial and has continued to represent these parties in the appeal brought by the Plaintiffs.
Hillius v. 18 Paradise, LLP, Supreme Court Rejects Plaintiffs’ Request for Direct Review
Posted on: 04 Apr 2025
On April 2, 2025, the Washington State Supreme Court entered its order, rejecting the Plaintiff’s request for Direct Review with the State’s highest court. The one-page order, signed by Chief Justice, Steven Gonzalez, ordered the case to be transferred to Division I Court of Appeals. The Plaintiffs had primarily sought Direct Review by the Supreme Court of the trial court’s dismissal of the Plaintiffs’ Consumer Protection Act (“CPA”) claim, which had to that point been the heart of the Plaintiffs’ case against various defendants, in a case that had languished in Whatcom County Superior Court for nearly 5 years. Despite this attempt, the Plaintiffs arguments were unpersuasive, and the Supreme Court sided with the City of Lynden and MJ Management’s arguments that these issues should be heard by the Court of Appeals instead. MJ Management had sought to have the entire case dismissed because of continued missed deadlines by Plaintiffs’ Counsel, but the Supreme Court decided to not dismiss the case in its entirety. “This was a significant decision by the court today, but for all practical matters, the Plaintiffs’ appeal has only just begun,” stated Jeffrey Possinger, who represented MJ Management at trial. “The Plaintiffs have essentially appealed every order that was entered in this case, and based on that, we expect their briefing to be massive[.]” said Possinger. These issues related to late court filings, and the Plaintiffs’ and their counsels’ failure to timely file their appeal of the Judgement for attorneys’ fees will likely be raised again in the Court of Appeals. The parties, and most importantly, the rest of the homeowners at Homestead, will now have to wait to see how this latest chapter in this case unfolds with no end in sight. Possinger Law Group represented MJ Management, O’Bryan, and Williams in the Hillis v. 18 Paradise litigation through the trial and has continued to represent MJ Management in the appeal brought by the Plaintiffs before the Washington State Supreme Court.
Hillius v. 18 Paradise, LLP, Awaiting Decision on Motion to Dismiss in Washington State Supreme Court
Posted on: 13 Mar 2025
Following nearly 5 years of litigation in Whatcom County Superior Court and a trial in May 2024, the Hillius v. 18 Paradise, LLP case is now in front of the Washington State Supreme Court. Plaintiffs filed a notice of appeal to the State’s highest court in October 2024 and have further requested Direct Review, seeking to bypass the Court of Appeals to have the court review a slew of the trial court’s decisions on various grounds. Yet, the primary decision for which the Plaintiffs are seeking review is the trial court’s dismissal of the Plaintiffs’ Consumer Protection Act (“CPA”) claim against 18 Paradise and MJ Management on March 21, 2024 (see document 1 below) in addition to the trial court’s order of March 29, 2024, dismissing William “Mick” O’Bryan and Josh Williams from the case (see document 1 below). In the lead up to the trial, the CPA claim had been the heart of the Plaintiffs’ class action suit. After this loss, the Plaintiffs sought CR 54(b) certification of this decision on April 4, 2024 so that they could seek an immediate appeal (see document 1 below). Without the CPA claim, the trial went forward in May 2024, but the Plaintiffs did not file an appeal on their certified court decision. After filing their Notice of Appeal, but before filing their Statement of Grounds for Direct Review, MJ Management filed a Motion to Dismiss Plaintiffs’ appeal on the basis that the Statement of Grounds had been filed late (nearly 2 months according the appellate court rules); the appeal of the CR 54(b) certified CPA claim had not been timely appealed, and MJ Management’s judgment against Plaintiffs and Plaintiff’s Counsel for unpaid attorney’s fees and costs had also not been appealed timely (see document 1 below). In addition to the Motion to Dismiss, both MJ Management and the City of Lynden filed objections to Plaintiffs’ request for the Washington State Supreme Court to take review of this issue instead of the Court of Appeals. The parties have fully briefed these issues Motion to Dismiss (see documents 2, 3, and 4 below), Statement of Grounds (see documents 5, 6, and 7 below) and a hearing date has been set for April 1, 2025. The issues for the court are for the court to decide whether to grant MJ Management’s Motion to Dismiss and also to determine if they will take direct review of the Plaintiffs’ appeal. Possinger Law Group represented MJ Management, O’Bryan, and Williams in the Hillis v. 18 Paradise litigation through the trial and has continued to represent MJ Management in the appeal brought by the Plaintiffs before the Washington State Supreme Court. = = = = = References: 1_Order Dismissing CPA Claim, Order Dismissing O’Bryan and Williams, CR 54(b) Certification, MJ Management Judgment for Fees 2_MJ Management Motion to Dismiss 3_Plaintiffs’ Answer to Motion to Dismiss 4_MJ Management Reply 5_Plaintiffs’ Statement of Grounds 6_MJ Management Objection to Statement of Grounds 7_City of Lynden Objection to Statement of Grounds
MJ Management Continues Collection Efforts Post-Hillius
Posted on: 01 Mar 2025
Following the trial court’s Final Orders entered on September 11, 2024, which determined that the correct amount of the Homestead Joint Maintenance Fee was $36.00 per homeowner per month, the court authorized both 18 Paradise and MJ Management to communicate with homeowners. Consistent with the court’s final orders, MJ Management began efforts in early 2025 to settle accounts with Homestead homeowners who still had outstanding balances owed to the company during the period it operated under its Management and Lease Agreement with 18 Paradise. MJ Management engaged Possinger Law Group to assist with collecting these amounts due. Beginning in January, MJ Management (through Possinger Law Group) sent out notices for payment to these homeowners to settle their accounts. Fortunately, this process has moved forward smoothly, with a significant number of homeowners either paying the amounts still owing or otherwise settling their accounts with MJ Management. There have been some homeowners that have refused to pay the amounts owing. For those homeowners that have stated their refusal to pay, MJ Management authorized Possinger Law Group to initiate collection actions. The first of these collection actions, MJ Management, LLC v. Hoag (WCSC# 25-2-00161-37) is currently moving forward in Whatcom County Superior Court. There has been some confusion created within the community by those actively encouraging homeowners not to settle their accounts on the basis that they could end up paying double to both 18 Paradise and MJ Management. To resolve any remaining confusion, amounts owing to MJ Management only continue through May 31, 2023. Amounts owing from June 1, 2023, and after are to be sent to 18 Paradise. Following years of litigation, MJ Management is looking forward to having this chapter wrapped up in the coming months. Possinger Law Group represented MJ Management in the Hillis v. 18 Paradise litigation through the trial and has continued to represent MJ Management in the appeal brought by the Plaintiffs, which is now pending a Motion to Dismiss before the Washington Supreme Court.