Netflix (NFLX) was supposed to get its happily ever after: Its stock had been skyrocketing, and Wall Street largely saw it as a recession-proof play amid swirling macroeconomic concerns.
But that all changed with one social media post from President Donald Trump, in which he announced plans to impose a 100% tariff on all movies made outside the U.S.
The president wrote Sunday night on his Truth Media social platform that the “Movie Industry in America is DYING a very fast death.” Trump claimed that other countries are offering incentives to studios outside the country, which is “a concerted effort by other Nations and, therefore, a National Security threat. It is, in addition to everything else, messaging and propaganda!”
He finished the post: “WE WANT MOVIES MADE IN AMERICA, AGAIN!”
Commerce Secretary Howard Lutnick responded on X, saying, “We’re on it.”
As of now, there are no details on how this plan will be implemented or what will be included in these tariffs.
Netflix’s stock price fell almost 3.7% between Friday’s close and Monday’s open. It’s since risen some throughout the day, but it’s still down about 1.3% as of midday. This sudden fall marks a stark reversal from late April, when a bullish analyst report from William Blair said Netflix is “currently not experiencing economic headwinds with stable retention” after its strong quarter. The financial services firm maintained its “outperform” rating for Netflix’s stock.
“Netflix is relatively more insulated from the recent market turmoil because it is not overly exposed to tariffs and will be relatively resilient in any potential future economic downturn,” analysts Ralph Schackart and Jack Brenczewski wrote in the report. “Overall, Netflix remains well positioned to remain a secular streaming winner, in our view, and we believe longer term it will continue to have pricing power.”
Other entertainment companies have seen somewhat similar dips following Trump’s social media post. Paramount’s (PARA) stock is down 0.7%, Warner Bros Discovery (WBD) is down 0.6%, and Lions Gate (LGF.A) is a big loser on the day, down 5.4% as of early Monday afternoon. Disney’s (DIS) stock fell but has since recovered its earlier losses, up 0.1%, similar to Comcast (CMCSA), which was up 0.4%.
Key details of the president’s plan remain unclear, including whether the tariff would apply only to theatrical releases or also to streaming content, how it would be calculated — by production budget or box office revenue — and whether it would affect TV shows or already-completed films.
Citigroup (C) analyst Jason Bazinet told The Wrap that, in a worst-case scenario, Netflix could face a 20% decline in earnings and an annual cost increase of $3 billion. He said, however, that the actual impact is likely to be significantly lower.
According to Citigroup’s analysis, the streaming platform currently spends about $17 billion per year on content, with 60% of that being original productions and the remaining 40% licensed. Of the original content, half is produced outside the U.S. Based on these figures, a 100% tariff on movies could reduce earnings per share by 20%, or approximately six cents.
And that cost could be passed on to Netflix’s consumers.
“If we assume U.S. production costs are 35% higher than non-U.S. costs, it’s akin to a $1 billion increase in annual costs,” Bazinet said. “If this cost is borne by U.S. consumers, it would cause [average revenue per user in the U.S. and Canada] to rise about 7%.”
Trump addressed his planned movie tariffs in front of reporters later Sunday after returning from Mar-a-Lago. He said, “I’ve done some very strong research over the past week, and we’re making very few movies now. Hollywood is being destroyed. Now, you have a grossly incompetent governor that allowed that to happen, so I’m not just blaming other nations, but other nations have stolen our movie industry.”
Hollywood producers and labor unions have been urging Governor Gavin Newsom to boost the state’s tax incentives to better compete with other locations. A ProdPro survey of executives found California was the sixth most-preferred place to film in the next couple of years, behind Toronto, the U.K, Vancouver, Central Europe, and Australia.
When speaking to reporters, Trump also accused other countries of stealing America’s “moviemaking capabilities” and said their financial support for Hollywood films was “sort of a threat to our country in a sense.”
In January, Trump named Jon Voight, Sylvester Stallone, and Mel Gibson as “special ambassadors” to bring a “troubled” Hollywood back “bigger, better and stronger than ever before.” Sources told Variety that Voight and his manager, Steven Paul, have been taking meetings with various guilds to advise the president on how to reinvigorate filming in the U.S.
Under Trump’s proposal, nearly all of this year’s major blockbusters would have been affected, including the top-grossing Minecraft Movie, filmed in New Zealand, and Captain America: Brave New World, which was shot across multiple countries, including the U.S. Coming releases such as Mission: Impossible: The Final Reckoning and the John Wick spin-off Ballerina would also feel the weight of the president’s tariffs.
Gibson, meanwhile, has been planning to shoot his Passion of the Christ sequel in Italy.
“I think the most likely consequence is not that more productions will be done outside of America, or more productions would be done in America, but probably that just fewer productions will (be made),” Scott Roxborough, the Europe bureau chief of the Hollywood Reporter, told Reuters.
On Monday, the British media and entertainment union Bectu called on the British government to “move swiftly to defend this vital sector ... as a matter of essential national economic interest.” Officials in Australia and New Zealand also responded to Trump’s proposed movie tariffs by pledging support for their local sectors, which have become key global filming hubs — Marvel movies have been filmed in Australia, while New Zealand was home to The Lord of the Rings franchise.
So will we see the third Dune movie filmed in New Mexico and the next Mission Impossible installment in South Dakota? For now, the only certainty is uncertainty — and a growing sense that Netflix’s “safe” status in a trade war may have been a Hollywood fantasy all along.
