The Hollywood board in Los Angeles on January 22, 2024
Mario Tama | Getty Images News | Getty images
LOS ANGELES – President Donald Trump has just launched a trade war with the best friend of Hollywood.
Canada known as Hollywood North, has been a bustling production hub for American film and television series for decades. In addition to offering a tempting tax credit for Stateside Studios, the country has developed a first-class workforce of sector talent in front and behind the camera.
Trump's import tariffs on Canadian goods can threaten that relationship, Hollywood insiders told CNBC.
Some fear that an increased trade war with Canada can lead to the Northern neighbor of the US taking revenge in ways that would harm the film production, making those sought -after tax credits or final phases possible in the American studios. Others believe that the relationship between Hollywood and Canada is strong enough, and lucrative enough, to withstand Trump's taxes.
“Nobody – on either side of the border – wants to see American rates on Canadian goods,” wrote Canadian Prime Minister Justin Trudeau on Friday on social media site X and promised a “powerful and immediate response”.
On Saturday, Trump announced 25% rates for most goods from Mexico and Canada, as well as a 10% duty on goods from China. Trudeau immediately brought retribution rates on American goods and said, “Like the American rates, our reaction will also be provided.”
Trump's rates can put pressure on production budgets, according to insiders from the industry, especially for films and television shows that import certain textiles for costumes or unique building materials such as special glass from outside the US
However, most studios burn local material for their productions. It is rare for a Los Angeles -based set to bring in wood from Canada, for example. Films and TV programs filmed in other countries will mainly use stocks at those locations or send them from the US, this includes food used in catering, which can see a slight increase in price due to rates, but probably not will change too much.
Moreover, many of the line items are rented on the typical production budget. Lighting, cameras and other production equipment come from Studio warehouses and are rented for the duration of the shoot, so that the production costs are collected to a certain extent of higher levies.
Consumers squeeze
Nevertheless, ensure that higher rates in different sectors can influence the portfolios of cinema visitors and in turn threaten the sale of cash register.
Of companies that import goods into the US from these affected countries, it is expected that extra costs will be passed on to consumers, which increases the costs of hundreds of ordinary household goods. Members of the film industry who spoke to CNBC said they were worried that if customers start sharpening their wallets, traveling to the theater can be one of the costs that are cut.
Hollywood has only just started returning after the closure of COVID-19 Pandemic production was exacerbated by double labor attacks. Now, even if studios are able to improve the cadence of theatrical releases, there is concern that cinema visitors will not have the discretionary income to see new films and buy Popcorn.
If that reality goes, the entire industry could suffer.
Eventually experts from the CNBC industry said that Hollywood will navigate the consequences of Trump's rates. However, it will probably have a more difficult time to deal with a withdrawal of consumer spending.
The hope is that even if the prices worry, blockbuster films set for release in 2025 are sufficient to stimulate ticket sales and foot traffic.