(Reuters) -American media stocks fell on Monday after President Donald Trump unveiled a 100% tariff on all movies produced outside the U.S., in his latest levies that could sharply raise costs for Hollywood studios and roil the global entertainment industry.
Trump's announcement was light on details. It did not say whether the duties will apply to films on streaming platforms as well as theatrical releases, nor did it detail whether tariffs would be based on production costs or box office revenue.
"There is too much uncertainty, and this latest move raises more questions than answers," said PP Foresight analyst Paolo Pescatore. "It doesn't feel like something that will happen in the short term as everyone will be grappling to understand the whole process. Inevitably costs will be passed on to consumers."
The move dashed hopes that Trump was backing away from his aggressive trade agenda, which has rattled business confidence, clouded the outlook for U.S. assets and dented economic growth.
The tariffs could particularly hit Netflix as the streaming pioneer relies on its global production network to produce content for international audiences. Its shares tumbled 2.5% in early trading.
Disney, Warner Bros Discovery and Universal-owner Comcast fell between 0.7% and 1.7%. Stocks of theater operators such as Cinemark and IMAX were down 5.4% and 5.9%, respectively.
Imax declined to comment, while others did not respond to requests for comment.
Despite Los Angeles' historic reputation as the hub of cinema, studios have over the years shifted production overseas to locations such as the UK, Canada and Australia to take advantage of generous tax credits and lower labor costs.
Most of this year's Oscar best picture nominees were filmed outside the U.S. and a survey among studio executives over their preferred production locations for 2025 to 2026 by ProdPro showed that the top five choices were all overseas.
Forcing a return to U.S. soil would drive up production budgets and disrupt a global production supply chain that now includes shooting in Europe, post-production in Canada and visual effects work in Southeast Asia.
"The problem is that pretty much all the studios are moving tons of production overseas to reduce production costs," said Rosenblatt Securities analyst Barton Crockett.
"Raising the cost to produce movies could lead studios to make less content. There's also a risk of retaliatory tariffs against American content overseas.
Hollywood is already in the crosshairs of China, which vowed last month to curb U.S. movie imports in retaliation for the latest broader tariffs. But analysts said the hit may be limited as box office returns from China have been declining.
Still, any tariffs would put further pressure on an industry already reeling from cord-cutting and rising labor costs after the 2023 Hollywood strikes secured higher pay and broader benefits for writers and actors.
STOKING CONCERNS
Trump's tariff threat - framed as a national security move - sparked concern across the global film industry.
Leaders in Australia and New Zealand, key locations for Marvel movies and "The Lord of the Rings," said they would defend local film industries. British media union Bectu urged the government to protect the country's "vital" film sector, warning tens of thousands of freelance jobs were on the line.
Matthew Stillman, CEO of Prague-based Stillking Films, one of the biggest producers of U.S.-financed international content in Central and Eastern Europe, said the tariff threat risked derailing global production pipelines.
"We are awaiting clarity about how the tariff is calculated and whether its on international rebated production, film financing or U.S. distribution - all of which have implications and complications," he said.
Analysts also said enforcement would be tough, as major media conglomerates could restructure operations to skirt the duties, producing content through foreign subsidiaries or licensing content across borders.
"A single movie can also be shot in several countries, as is the case with many James Bond movies, so it is unclear if another way around this is by having just a few scenes filmed in the U.S.," said Emarketer analyst Ross Benes.
"It's another half-baked idea that will introduce panic for workers in the marketplace as the legality and enforcement are worked out ex post facto."
(Reporting by Harshita Mary Varghese and Aditya Soni in Bengaluru; Additional reporting by Michael D Kahn in Prague and Muvija M in London; Editing by Sriraj Kalluvila)
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