US media stocks tumble after Trump’s 100% tariff threat

American media stocks experienced a decline on Monday, May 5, following President Donald Trump’s announcement of a 100% tariff on all movies produced outside the United States. This move has the potential to significantly impact Hollywood’s global operations and the broader entertainment industry.

The proposed tariff, though lacking in specific details, has raised uncertainty about its applicability. It remains unclear whether the tariff will be applied to films on streaming platforms, theatrical releases, or if it will be calculated based on production costs or box office revenue.

According to data from the American Motion Picture and Television Industry, American movies generated $22.6 billion in exports in 2023, contributing to a trade surplus of $15.3 billion. The potential impact of the tariff comes at a time when Hollywood increasingly relies on international production hubs. A recent survey by ProdPro revealed that the top five preferred production locations for studio executives planning for 2025 to 2026 were all outside the U.S., primarily due to tax incentives and cost efficiencies.

Analysts have suggested that streaming services, particularly Netflix, may be the most vulnerable to the tariff policy. Netflix has built its content model around a global production network aimed at delivering localized and international content. Following the announcement, Netflix shares fell 4.9% in premarket trading, leading to a decline in media sector stocks.

Despite Los Angeles’s reputation as the center of the movie industry, none of this year’s top ten Oscar contenders were filmed in the city. This highlights the extent to which production has shifted overseas. Many studios now operate through a global supply chain, with filming in Europe, post-production in Canada, and visual effects work outsourced to Southeast Asia. A forced return of production to the U.S. could drive up costs substantially.

In addition to the decline in media stocks, shares of major entertainment companies, including Walt Disney Co, Warner Bros, Discovery, and Universal-owner Comcast, also experienced a drop on Monday. These companies declined between 0.8% and 2.7% amid investor concerns over the financial implications of the proposed tariffs.