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Trump's tariff proposal causes muted reaction in film

industry

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Hollywood spent $24.3 billion in overseas productions over

last

12 months

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US film industry seeks tax incentives over tariffs

By Paul Sandle, Michael Kahn, Byron Kaye and Dawn

Chmielewski

LONDON/PRAGUE/SYDNEY/LOS ANGELES, Oct 18 (Reuters) -

" Star Wars: Starfighter" is filming in Britain, soundstages in

Hungary are packed and post-production houses in Australia are

humming, as the global film industry keeps rolling despite U.S.

President Donald Trump's renewed threats to impose tariffs on

movies made outside of the United States.

Trump has proposed levying a 100% tariff on films produced

overseas to stem the loss of film jobs to production hubs around

the world, reviving an idea he first broached in May.

The initial call for tariffs jolted the film world, and

temporarily halted projects and international movie finance

deals as producers evaluated the potential impact of the levy on

each project's financial viability, two sources familiar with

Hollywood motion-picture financing told Reuters.

This time around, the reaction has been more muted.

"Other than the initial flurry of 'Oh, he's said it again,'

people are not taking it as seriously as they did the first time

around," said Lee Stone, a partner at London law firm Lee &

Thompson, who worked on the Emmy-winning Netflix show

"Adolescence."

Trump initially called for a 100% tariff on movies produced

outside the country in early May, to stave off the "very fast

death" of the American film industry as incentives lured

filmmakers to production hubs around the world. The announcement

- just weeks before the Cannes Film Festival - caused a panic.

"It was terrible timing. Everyone was saying, 'What's going

to happen?'" said Stone, noting that Trump's threat resulted in

temporary paralysis. "I'm not getting the impression that

there's the same pause this time."

Newly released data from industry researcher ProdPro reveals

that while overall spending is down 15% from last year, amid a

pullback in scripted television series and big-budget feature

films, there is no evidence that Hollywood is abandoning global

production hubs.

"We're not seeing anything in the data that suggests studios

are opting to film more of their production in the U.S.

because of concern about the tariffs," said ProdPro

CEO Alexander LoVerde.

The U.S. remains the industry's largest production hub,

accounting for $16.6 billion in spending over the last 12

months, according to ProdPro. However, Hollywood studios and

streaming services spent even more - $24.3 billion - on film and

television projects produced outside the U.S. over that same

period, ProdPro reported, as they took advantage of tax

credits, lower labor costs and world-class soundstages.

The United Kingdom has become a major beneficiary of the

Hollywood exodus, attracting $8.7 billion in film and scripted

TV spending over the past year, including major film productions

like "Star Wars: Starfighter," the much-buzzed-about next entry

in the "Star Wars" saga set for release in May 2027. Canada

comes in a close second with $6.4 billion, according to

ProdPro's most recent report on production trends.

Other regions - Australia, Ireland, Hungary and Spain -

together accounted for nearly one-quarter of all production.

COVID-19 SUPERCHARGED PRODUCTION EXODUS

The COVID-19 pandemic and the Hollywood strikes by U.S.

writers and actors supercharged the exodus that began years

earlier.

"Australia became a bit of a production bubble where

particularly in Queensland, productions could continue even as

the rest of the world shut down," said University of Melbourne

film expert Kirsten Stevens.

Prague increased its tax breaks from 20% to 25% in January,

while Britain offers relief of 25.5% on qualifying films and TV

productions, with a higher rate for animated films and a new

credit for smaller independent films.

In places like Central Europe, a deep filmmaking tradition

and lower labor costs have attracted a long list of Hollywood

films including the Russo brothers' "The Gray Man," Netflix's

Oscar-winning "All Quiet on the Western Front" in the Czech

Republic, and Warner Bros Studios' "Dune: Part Three," which

began shooting this summer in Hungary.

"Hungarian soundstages are currently operating at full

capacity with both international and domestic

productions," Csaba Kael, government commissioner for the

development of the Hungarian Motion Picture Industry, told

Reuters.

Any change in U.S. trade policy would take time to

implement, Kael said.

Hollywood studios have found that distributing work across

multiple locations can accelerate the production timetable,

allowing films to be completed faster and cheaper.

"It's not uncommon at high-end films that a bunch of work

would come to Australia, but a bunch of work also might go to

New Zealand and to London and to somewhere else," said Mike

Seymour, Emmy-nominated visual effects specialist and lecturer

at the University of Sydney.

"Sometimes the film is being worked on literally 24 hours a

day because of all the time zones," he said.

STUDIOS PUSH FOR U.S. TAX INCENTIVES INSTEAD

For the moment, it is business as usual for filmmakers, said

Stephen Weizenecker, an entertainment lawyer with Barnes &

Thornburg in Atlanta. They are hoping to avoid any interruption

that throws off the schedule of a production, which can result

in actors, directors or even a filming location being

unavailable.

"The film industry dislikes uncertainty," Weizenecker said.

"Once it starts to hesitate, it means a project stops

altogether."

A coalition of American film industry unions and guilds,

joined by veteran actor Jon Voight, has asked Trump to consider

implementing a federal tax incentive to put domestic film

production on a more competitive footing with incentives offered

in other countries.

"What we really want is a national tax incentive that would

be more effective than any tariffs," one studio executive said.

Meanwhile, a bill with bipartisan support, known as the

CREATE Act, was introduced in the U.S. Congress this past

summer. It would extend a tax deduction for U.S. productions,

which is set to expire in December, and increase the cap on

deductible costs.

The looming threat of tariffs raises concern about the

potential impact on the economy and livelihoods in production

hubs around the world, if Trump follows through.

"It is hard for anyone here to understand the likelihood of

this coming into effect, but if it did, it would have a huge

impact," said a visual artist in the industry who declined to be

named over fears of losing financing. "It would be devastating."