- Netflix (NFLX) shares dropped as much as 5% in premarket trading after President Trump proposed a 100% tariff on foreign-produced films, impacting Disney (DIS), Paramount (PARA), Warner Bro. Discovery Inc. (WBD) and Comcast (CMCSA)-owned Universal.
- Trump’s Truth Social post described the U.S. movie industry’s decline as a “National Security threat,” directing the Department of Commerce to implement tariffs to revive domestic film production.
- The tariff could raise production costs for studios reliant on global locations, potentially disrupting streaming platforms like Netflix and prompting retaliatory trade measures from countries hosting U.S. film productions.
The U.S. media and entertainment sector faced significant turbulence in premarket trading on Monday, with Netflix (NFLX) shares dropping as much as 5% following President Donald Trump’s announcement of a proposed 100% tariff on foreign-produced films. Trump’s statement, posted on Truth Social, labeled the decline of the American movie industry as a “National Security threat,” citing foreign incentives luring filmmakers away from the U.S. as a form of “messaging and propaganda.” This policy move also weighed on other major players, with shares of Walt Disney (DIS), Paramount Global (PARA), and Warner Bros. Discovery Inc. (WBD) declining, alongside a slight downturn for Comcast (CMCSA)-owned Universal Pictures.
Trump’s directive, which authorizes the Department of Commerce and the U.S. Trade Representative to initiate the tariff implementation process, aims to revive domestic film production under the rallying cry, “WE WANT MOVIES MADE IN AMERICA, AGAIN!” The proposed 100% tariff targets all movies produced outside the U.S., a move that could disrupt the global supply chains of Hollywood studios, which rely heavily on international locations for cost-effective production. The announcement has sparked concerns about rising production costs, potential retaliation from trading partners, and the impact on streaming platforms like Netflix, which leverage global production networks to create content for international audiences.
The market’s reaction reflects the industry’s vulnerability to such a policy shift. Netflix, with its extensive international production footprint, faces heightened risks, as the tariff could inflate costs for its original programming, which accounts for a significant portion of its $16 billion content spend in 2024. Similarly, Disney, Paramount, and Warner Bros. Discovery, which have increasingly shifted shoots to countries like the UK and Canada for tax breaks, may see squeezed margins if forced to relocate production to the U.S. Comcast’s Universal Pictures, while less impacted in premarket trading, is not immune, given its reliance on global markets for both production and distribution.
Trump’s assertion that the U.S. film industry is “DYING a very fast death” highlights ongoing challenges, including a 40% decline in Los Angeles film production over the past decade. However, the proposed tariff raises questions about its scope and enforcement, particularly whether it would apply to streaming content and how costs would be allocated across studios, distributors, or consumers. Industry experts warn of potential retaliatory tariffs from countries like Canada, Australia, and the UK, which host significant U.S. film productions, potentially escalating trade tensions and further disrupting the global entertainment ecosystem.
Investor sentiment, already cautious amid broader economic uncertainties, has been rattled by the lack of clarity on implementation. The tariff’s potential to increase production budgets could pressure profitability for media companies, many of which are still navigating the transition from linear TV to streaming. While Trump’s policy aims to bolster domestic filmmaking, it risks alienating international partners and inflating costs for an industry that thrives on global collaboration. As the Department of Commerce begins its work, the media sector braces for a period of uncertainty, with stock declines signaling investor apprehension about the tariff’s far-reaching implications.
WallStreetPit does not provide investment advice. All rights reserved.
Leave a Reply