Movie Tariffs Could Open a Pandora's Box

Once you get started on tariffs, it's hard to know where to stop.

- Jeff Sommer

Cars, food, shoes, steel, aluminum, pharmaceuticals, and myriad other products are included on the Trump administration's list. Why not add movies?

President Donald Trump did just that on May 4, proposing to start taxing foreign-made movies 100 percent. He said movie tariffs were needed to stop Hollywood from dying a "very fast death."

How exactly the government would collect a tariff on movies wasn't clear. Nor was it obvious that movie tariffs would bolster film production in California or receive much support from consumers. Frankly, as a movie watcher, do you really want to have to pay more to see films made abroad? These problems alone made the idea unpopular, with Hollywood industry and labor groups saying they favored tax breaks, not tariffs.

But there's another problem with the idea, an even bigger one. It hasn't gotten much attention, yet it's profound. Movies are a service, not a physical product, and services are an area where the United States is an exceptional country.

Giant tech firms that dominate the stock market like Alphabet (Google), Meta (Facebook), Microsoft, and Netflix are service businesses, to one extent or another, and Apple, Amazon, Nvidia, and even Tesla all have large service components. So do banks, asset management companies, law firms, universities, healthcare, the entertainment industry, tourism, the news business, and loads of other areas where the US is an outstanding performer.