The Hollywood sign in Los Angeles on Jan. 22, 2024
Mario Tama | Getty Images News | Getty Images
LOS ANGELES — President Donald Trump just launched a trade war with Hollywood’s best friend.
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 import tariffs on Canadian goods could threaten that relationship, Hollywood insiders told CNBC.
Some fear that a heightened 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.
“No one — on either side of the border — wants to see American tariffs on Canadian goods,” Canadian Prime Minister Justin Trudeau wrote on social media site X on Friday, promising a “forceful and immediate response.”
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.”
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.
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.
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, insolating 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.
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 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.
If that reality bears out, the whole industry could suffer.
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.
The hope is that even if prices spike, blockbuster films set for release in 2025 will be enough to drive ticket sales and foot traffic.
