How Trump’s 100 Tariff Threat Affects US Media Stocks

American media stocks experienced a ‘decline’ on Monday, May 5, after President Donald Trump announced a 100% tariff on films produced outside the United States, a decision that could have profound implications for Hollywood and the wider entertainment sector. 

While the specifics of the tariff remain unclear—particularly regarding its applicability to streaming services, theatrical releases, and whether it will be based on production costs or box office earnings—the uncertainty is ‘palpable’. 

In 2023, American films accounted for $22.6 billion in exports, contributing to a trade surplus of $15.3 billion, as reported by the “American Motion Picture and Television Industry”

This potential tariff comes at a time when Hollywood is increasingly dependent on international production locations; a recent ProdPro survey indicated that the top five preferred sites for studio executives planning for 2025 to 2026 are all outside the U.S., largely due to tax incentives and cost savings. 

Analysts suggest that streaming platforms like Netflix may be particularly at risk, as the company has developed a global production model to provide localized and international content.

Following the tariff announcement, Netflix shares dropped 4.9% in premarket trading, leading the downturn in media stocks. Notably, despite Los Angeles being synonymous with the film industry, none of this year’s top ten Oscar nominees were shot in the city, underscoring the shift of production overseas. 

Many studios now utilize a global supply chain, with filming in Europe, post-production in Canada, and visual effects outsourced to Southeast Asia, meaning a forced return to U.S. production could significantly increase costs.

Shares of leading entertainment firms, such as Walt Disney Co, Warner Bros, Discovery, and Comcast, which owns Universal, experienced declines on Monday, with losses ranging from 0.8% to 2.7%. This downturn was driven by investor apprehensions regarding the potential financial impact of the proposed tariffs.