US Media Stocks Fall as Trump Threatens 100% Tariff

Source Credit : Reuters

On Monday, American media stocks experienced a significant decline following President Donald Trump's announcement of a 100% tariff on all foreign-produced movies. This decision has the potential to greatly increase expenses for Hollywood studios and disrupt the global entertainment industry.

President Trump's announcement lacked crucial details. It failed to clarify whether the tariffs would be imposed on films distributed through streaming platforms or shown in theaters. Additionally, it did not specify whether the tariffs would be determined based on production costs or box office revenue.

Analysts have identified streaming giant Netflix as particularly vulnerable due to its reliance on a global production network to create content for international viewers. This vulnerability was reflected in a 4.9% drop in the company's shares during premarket trading, which also contributed to a broader decline in media stocks.

Despite Los Angeles' longstanding reputation as the hub of cinema, studios have increasingly chosen to shift production overseas to locations such as the UK. This decision is often driven by attractive tax breaks and lower production costs. Interestingly, none of the 10 best picture contenders for this year's Oscars were filmed in the Californian city. This trend highlights the evolving landscape of the film industry and the importance of considering global factors in production decisions.

A mandatory relocation back to the United States would probably result in increased production costs for an industry that currently depends on a worldwide supply chain. This includes filming in Europe, post-production facilities in Canada, and visual effects teams located throughout Southeast Asia.

Walt Disney Co , Warner Bros Discovery and Universal-owner Comcast were down between 0.8% and 2.7%. "The problem is that pretty much all the studios are moving tons of production overseas to reduce production costs and leverage foreign credits," said Rosenblatt Securities analyst Barton Crockett.

In 2023, American movies generated $22.6 billion in exports, resulting in a trade surplus of $15.3 billion, as reported by the American Motion Picture and Television Industry. This demonstrates the significant economic impact of the American film industry on the global market.

A survey conducted by ProdPro among studio executives revealed their top five preferred production locations for 2025 to 2026 were all located outside of the United States.