Hollywood runs a trade surplus and Trump’s tariff idea could jeopardize it

• Unlike the other sectors that President Donald Trump has sought to protect with tariffs, the U.S. film industry runs a $15.3 billion surplus—more than telecommunications, transportation, healthcare and insurance. Should Trump proceed with his plan, it could result in billions in lost earnings for major studios. Hollywood exports three times as much as it imports and runs a positive trade balance with every major international market.

It is undoubtedly President Trump’s most novel trade idea yet—impose tariffs on an industry where the U.S. is the world leader that runs a healthy trade surplus.

Thus far, whenever his administration has accused foreigners of “stealing” from hard-working Americans, the White House has focused on goods like motor vehicles and consumer electronics where production has moved offshore. Import duties are then levied in a bid to restore the U.S. manufacturing base to its former glory and ensure the country is less reliant on imports for critical goods.

What purpose do tariffs serve, however, when Hollywood is the dominant exporter of entertainment around the world? According to the Motion Picture Association, its members delivered an overall trade surplus to the U.S. of $15.3 billion in 2023. In other words, there is no imbalance to address.

“There is really isn’t any upside,” Heeyon Kim, assistant professor of strategy at Cornell University who researches the film business. “There is no deficit—it’s a very competitive part of the U.S. economy. Exporting films and intellectual property brings in more than the other industries that Trump usually thinks about, and these tariffs would put this in danger.”

‘Harebrained idea’

If anything, Hollywood has been too successful. Countries often were forced to implement quotas to ensure domestic cinema and television aren’t swamped with American pop culture. Should Trump proceed regardless, the added costs and likely retaliatory measures from trading partners could result in billions in lost earnings to the U.S. film industry, Kim estimates.

They also risk thousands of jobs in production marketing and distribution. Rather than help Hollywood, the Cornell professor argues, they would actually undermine a thriving and globally competitive part of the U.S. economy.

In a column published by Deadline, Pandemonium Films CEO Bill Mechanic argued California is losing production work to other U.S. states like Georgia, Louisiana and New Mexico where the conditions are more favorable.

“Like so many other harebrained ideas coming out of Washington these days, this one seems spewed out rather than thought through,” he wrote for the entertainment news site. “It presents a solution that doesn’t solve anything, but aims to create headlines and noise.”

Trump insists ‘I want to help the industry’ after shares in studios drop

When contacted by Fortune, the MPA declined to provide a statement explaining its policy position towards Trump’s proposd film tariffs.

But it did point to data showing: 1) it exports three times as much value as it imports 2) it generated a surplus for the U.S. in every major market in the world, and 3) it was responsible for a more positive contribution to trade than telecoms, transportation, insurance and healthcare industry.

Nearly 40 years on since Ronald Reagan said the scariest words in the English language are “I’m from the government and I’m here to help,” the most influential Republican president since claimed he hoped to do just that for Hollywood.

“I’m not looking to hurt the industry,” he insisted on Monday after shares in Netflix, Disney, Warner Bros. Discovery and Paramount all initially fell in early morning trading. “I want to help the industry.”

White House spokesperson Kush Desai told Fortune Trump hadn’t yet made up his mind on the issue of foreign film tariffs. Should they be implemented after all, however, the result could be higher costs for studios, fewer productions and less choice for consumers.

Mechanic said the White House would only make things worse: “He’s the guy lighting the fire to burn down Hollywood,” he wrote in Deadline, “not the one putting it out.”

This story was originally featured on Fortune.com