Harry Potter was filmed in Britain but made a fortune for Americans – Trump's film tariffs make no sense

Yahoo

05-05-2025

Now I don't want to alarm anyone. But I'm starting to wonder if Donald Trump might have posted something on the internet without thinking through its implications beforehand.
The President's proposal to levy 100 per cent tariffs 'on any and all Movies coming into our Country that are produced in Foreign Lands' sounds, on the face of it, like an attempt to shore up another struggling area of US manufacturing – namely Hollywood films that are made in Hollywood itself.
Because of enticing tax incentives, top-tier facilities and highly skilled local workforces in places like the UK, Canada and Eastern Europe, studios have for many years been shooting and finishing their most expensive productions overseas. Even the most glaringly American movies are, these days, rarely all that American. Baz Luhrmann's Elvis swivelled his hips not in Memphis and Vegas, but on Australia's Gold Coast. Barbieland was built in Hertfordshire, about eight miles down the road from St Albans.
This phenomenon, known as runaway production, is the sort of neo-Thatcherite arrangement that fiscal conservatives should love. Take the example of the Harry Potter franchise: a US studio, Warner Bros, buys the rights to a British series of novels, shoots them in the UK with an international cast and crew, generating huge investment in the local economy, then releases them worldwide and makes a fortune.
All profits then flow back to the US-based studio itself, so they can happily repeat the exercise 15 years later when they remake the thing as a streaming series. Economically, everybody wins. But the claim that this means other nations have stolen America's film industry is obviously ludicrous: if anything, America's film industry has annexed theirs. And they – meaning we – are at peace with that. First because it's good for business. But also because it means Hogwarts can look like Alnwick Castle, Durham Cathedral and so on, rather than a computer-generated Skeletor's Fortress in the middle of Grizzly Creek Redwoods State Park.
Presumably when Trump talks about tariffs in this instance – and much presuming is required, given the total incoherence of the announcement – he means hitting the studios with levies that would cancel out any tax breaks they receive overseas. And one of two possible consequences would flow from this.
Either we'd see a grim (but temporary) fallow period for the entertainment business, as the studios build the facilities and staff they need at home: bad news for UK crew, who just weathered one of these due to the 2023 strikes. Or, more likely, we'd see a simple corporate abandoning of ship, as the studios establish bases of operations overseas instead and carry on in exile as before.
The films themselves will still be made; the appetites of the international market (which far eclipses the American domestic one) will make sure of that. And US distributors themselves should be fine, since films are digital goods, and therefore exempt from tariffs in line with a World Trade Organisation moratorium on imposing customs duties on electronic transmissions, which has been in place since 1998. True, the Trump administration might find a workaround for this, but the cost would ultimately be borne by American cinema-goers, as ticket prices increased to fund the latest Maga tax.
The film industry's output can't be divided into American and Other: the business is simply too interconnected for that. Ultimately, the only credible way for Trump to crush the alleged 'national security threat' of, say, the Minecraft movie being shot in New Zealand is by offering federal tax credits that would make it worthwhile to shoot the thing in Los Angeles instead.
Impotent flailing might play well with the base, but cinema is one area in which tariffs will cause far more misery at home than abroad. Trump's attempt to save film production in America might prove the final nail in its coffin.
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