BOM Threatened By Trump Tariffs

The Hollywood sign in Los Angeles on Jan. 22, 2024
Mario Tama | Getty Images News | Getty Images

LOS ANGELES — President Donald Trump picked a fight with Hollywood’s best friend.

Hollywood North Under Threat

Known as Hollywood North, Canada has been a bustling production hub for American film and television series for decades. In addition to offering an enticing tax credit for stateside studios, the country has developed a top-notch workforce of industry talent in front of and behind the camera.

Trump’s proposed import tariffs on Canadian goods could threaten that relationship, Hollywood insiders told CNBC.

Trade War Fears

Some fear that a trade war with Canada could cause the U.S.’ northern neighbor to retaliate in ways that would hurt film production, potentially rescinding those sought-after tax credits or closing stages to U.S. studios altogether. Others believe the relationship between Hollywood and Canada is strong enough, and lucrative enough, to withstand Trump’s levies.

Retaliatory Measures

On Saturday, Trump announced 25% tariffs on most goods from Mexico and Canada, as well as a 10% duty on goods from China. Trudeau immediately slapped retaliatory tariffs on American goods, saying, "Like the American tariffs, our response will also be far-reaching."

Paused Tariffs

On Monday, both Canada and Mexico announced the tariffs would be paused for 30 days after the countries agreed to greater border controls.

Production Budget Pressures

Should the levies be revived in a month, Trump’s tariffs could put pressure on production budgets, according to industry insiders, particularly for films and television shows that import certain textiles for costuming or unique construction materials such as specialty glass from outside the U.S.

Locally Sourced Supplies

However, most studios source materials locally to their productions. It is rare for a Los Angeles-based set to bring in lumber from Canada, for example. Films and TV shows filmed in other countries will predominantly use supplies in those locations or ship them from the U.S. This includes food used in catering, which could see a slight uptick in price because of tariffs, but likely will not alter budgets too much.

Rented Equipment

Additionally, many of the line items on the typical production budget are rented. Lighting, cameras and other production equipment come from studio warehouses and are leased for the duration of the shoot, isolating production costs from higher levies to an extent.

Squeezing Consumers

Still, concerns are growing that higher tariffs across sectors could affect moviegoers’ wallets and in turn threaten box office sales.

Box Office Impact

Companies importing goods into the U.S. from these affected countries are expected to pass additional costs onto consumers, raising the cost of hundreds of common household goods. Film industry members who spoke to CNBC said they were worried that if customers start to tighten their purse strings, trips to the theater could be among the expenses that get cut.

Hollywood’s Rebound

Hollywood has only just begun to rebound after Covid-19 pandemic production shutdowns were exacerbated by dual labor strikes. Now, even if studios are able to improve the cadence of theatrical releases, there is concern that moviegoers will not have the discretionary income to see new films and buy popcorn.

Conclusion

Ultimately, industry experts told CNBC that Hollywood will navigate whatever consequences come from Trump’s tariffs. However, it likely will have a harder time dealing with any pullback in consumer spending.

FAQs

Q: What is Hollywood North?
A: Hollywood North is the nickname for Canada, which has been a popular filming location for American film and television productions.

Q: Why are Canadian goods under threat?
A: President Donald Trump’s proposed import tariffs on Canadian goods could harm the relationship between Hollywood and Canada, potentially leading to a trade war.

Q: How could Trump’s tariffs affect production budgets?
A: Tariffs could increase costs for films and television shows that import certain textiles or construction materials, potentially affecting production budgets.

Q: How might consumers be affected?
A: Higher tariffs across sectors could lead to increased prices for household goods, potentially reducing consumer spending on discretionary items like movie tickets.