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.

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