US President Donald Trump announced a 100 percent tariff on movies produced outside the country. Photo: AFP / Pool / Christopher Furlong
The chief economist at a Wellington-based think tank believes the US president has a stronger than usual argument to slap tariffs on foreign-made films, but says he'll struggle to do it.
Donald Trump said on Tuesday, the US would impose a 100 percent tariff on all films made outside the country - an idea initially floated in May.
In a post on Truth Social, Trump said the US movie industry was dying a "very fast death" due to the incentives that other countries were offering to draw American filmmakers.
Finance and Economic Growth Minister Nicola Willis announced the film subsidy would more than double in Budget 2025, bringing the total International Screen Production Rebate to $1.09 billion, arguing the industry could not survive without it.
The NZ Film Commission's head of marketing is currently in Los Angeles in a bid to strengthen New Zealand's place in the US market, which is responsible for about one third of the country's annual screen sector revenue - about $1.2b.
SPADA president Irene Gardiner* said the mere prospect of tariffs could lead to hesitancy in the market, and maintained it should strengthen New Zealand's resolve to invest in local productions.
Trump 'actually on to something'
Eric Crampton, think tank NZ Initiative's chief economist said the US president's argument for tariffs - a necessary remedy to a trade imbalance - didn't often stack up.
But, when it came to the film industry, "he's actually on stronger ground," he said.
"Film subsidies provided by countries like New Zealand, Australia, and Canada - broadly internationally - are very high.
"That means that Trump is actually on to something about the unfairness."
Crampton said countries offering subsidies were competing with each other in a race to the bottom in a bid to attract Hollywood productions to their shores.
He said the best response would be a coordinated removal of subsidies - "effectively a disarmament treaty" - but admitted the tariff threat was unlikely to prompt it, given the challenges of implementing such a tax.
NZ Initiative chief economist Eric Crampton. Photo: Supplied
Crampton said it appeared the US administration had made little progress since Trump first announced the tariffs in May - and the question remained, "Could he actually do it?"
"You don't have films showing up on boats or coming in on planes to a customs depot where they would only be released after a tariff is paid.
"Instead, they are complex international co-productions. Films are distributed digitally, they are a service rather than a good when we think about these things and it's really hard to tariff a service."
Deciding what constituted an insufficiently American film, would also be an issue, he said.
"Suppose they investigate and find that NZ's film subsidies warrant retaliatory action.
"They would still need to decide at what level to trigger a penalty - because a film could be completely made in NZ, or it might just have a bit of CGI post-production done here.
"It gets very messy, very quickly."
Tariffs an incentive to invest in domestic market - producer's guild
The Screen Production and Development Association (SPADA) said the US president's reannouncement was a surprise, given the pushback from the American screen industry in May.
Gardiner said US productions made up a large majority of international productions in New Zealand, and the consequences of tariffs would be devastating for the country's film sector.
"The international sector and the domestic sector is quite a balanced ecosystem - they sort of need and feed each other.
"So if you chop that bit out of the industry, it would be devastating and it would be an enormous amount of lost jobs for screen industry people."
Gardiner said the broader world economy would also suffer, given productions were also served by a range of sectors including, hospitality and transport.
She said although many believed tariffs were unlikely because the fallout would be so dramatic, just the prospect had people concerned and could create uncertainty in the market.
Gardiner said the reannouncement should be a motivator to invest in the domestic film industry.
"If we were to lose US production that's what you'd want to do, you'd want to invest more there and really build up our local storytelling and getting New Zealand stories to the world."
McClay to meet with Hollywood
New Zealand's Trade Minister Todd McClay said there was no intention at this stage for the government to look at working with other countries on removing film subsidies, which he said was not really a subsidy anyway so much as a recognition of the cost involved.
McClay said it was unclear how any tariffs on film would work.
"No idea about that at all, so we've asked our officials in Washington to get a bit of information. I'm not sure there will be too much detail yet, it's really hard to know."
For example, a film might be filmed in one location, produced in a different country, then distributed in the US - so it was uncertain who the tariff would apply to and at what stage in the process.
McClay said he had a meeting set for tomorrow to discuss the tariff possibility.
"I'll be having an online call with a number of the big players tomorrow who are involved in Hollywood to see what their view is, but our sector is resilient. They attract films from around the world, and we're just going to have to see exactly what President Trump means after his tweet.
"They are sought after and the reason that people make films here or get extra content here is because they're exceptional at what they do. I don't think that's going to change out of Hollywood, but it is a headache for Hollywood."
Film Commission watching closely
The New Zealand Film Commission (NZFC) said its been looking for months at the impact of a potential US tariff on foreign-made films, and monitoring developments since the prospect was raised in May.
A spokesperson said the NZFC's head of international attraction and marketing, Philippa Mossman, was currently in Los Angeles in a bid to strengthen New Zealand's place in the production industry.
"This visit is part of NZFC's ongoing efforts to maintain visibility and strengthen relationships in the US market."
They said the Commission's current approach was to maintain strong connections with the film industry in the US, but also push for partnerships through co-production treaties with other countries, such as India, the UK and Ireland.
It said it was also exploring opportunities for New Zealand in the Middle East.
*Gardiner is also an RNZ board member
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