SYDNEY (Reuters) -New Zealand will allocate more budget funds to give rebates to foreign studios for filming movies in the country - a move which follows U.S. President Donald Trump's announcement of 100% tariffs on films made outside the United States.

New Zealand, where the "Lord of the Rings" trilogy was shot, has become a popular filming location for Hollywood movies due to lower costs and government incentives.

"We are sending a clear message to the world: New Zealand is the best place in the world to make movies. Bring your productions here to take advantage of our talent and locations," Finance Minister Nicola Willis said in a statement.

When announcing the 100% tariffs this month, Trump said Hollywood was dying a "very fast death" due to incentives offered by other countries.

An additional NZ$577 million ($339 million) will be injected into next week's federal budget to sustain New Zealand's International Screen Production Rebate scheme. That comes despite the government's proposed cuts to baseline spending as tax revenue shrinks.

Under the rebate programme first introduced in 2014, eligible productions can access a cash rebate of 20% for production costs of more than NZ$15 million for feature films, and NZ$4 million for television shows.

"While industry incentives are not generally our favoured approach, the reality is we simply won't get the offshore investment in our highly successful screen sector without continuing this scheme," Willis said.

New Zealand's film sector employs about 24,000 people and generates NZ$3.5 billion annually, with around a third of revenue coming from the United States, its foreign ministry said in a March 2025 report.

Australia, Canada and the United Kingdom provide more generous incentives than New Zealand, Willis also said.

($1 = 1.7030 New Zealand dollars)