Major entertainment companies, including Netflix and Disney, experienced a significant downturn in their stock prices on Monday, May 5, 2025, following President Donald Trump's announcement of a proposed 100% tariff on foreign-produced films. This bold move, intended to bolster the American film industry, has raised eyebrows among investors and industry analysts alike.
As of 10 a.m. ET, Netflix shares had dipped approximately 2%, while Disney, which had initially dropped sharply, managed to recover to near-even. Other companies felt the brunt of the news as well, with Lionsgate seeing a staggering 6% decline, Paramount down 1.5%, and Warner Bros. Discovery falling by about 1%. The overall market reaction suggested a cautious outlook among investors, who are wary of the implications of such a drastic policy change.
Trump's announcement came via a post on his right-wing platform, Truth Social, where he declared, "The Movie Industry in America is DYING a very fast death. Other Countries are offering all sorts of incentives to draw our filmmakers and studios away from the United States. Hollywood, and many other areas within the U.S.A., are being devastated. This is a concerted effort by other Nations and, therefore, a National Security threat. It is, in addition to everything else, messaging and propaganda!" He further stated, "Therefore, I am authorizing the Department of Commerce, and the United States Trade Representative, to immediately begin the process of instituting a 100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands. WE WANT MOVIES MADE IN AMERICA, AGAIN!"
The potential impact of these tariffs has left many in the entertainment sector pondering their future. The film industry has long relied on international collaborations and tax incentives offered by foreign countries to attract filmmakers. Trump's proposed tariffs could impose significant costs on production companies, which have typically been insulated from trade wars. This latest move indicates a potential escalation in the ongoing trade tensions, even as the White House has reported progress in negotiations with other nations.
In the wake of Trump's announcement, media stocks continued to fluctuate throughout the morning. For instance, Netflix shares plummeted over 4% initially, dropping to $1,107.01 before recovering slightly to $1,143 by midday. Paramount Global also saw its shares drop 3.1% early on, with a recovery to $11.33 per share later in the day. Disney shares hit an intraday low of $89.61 before climbing back to $92.61.
Fox Corporation and Warner Bros. Discovery faced similar declines, with Fox's stock down 3.6% to $47.66 and Warner Bros. Discovery dropping 5.3% to an intraday low of $8.08. The overall market sentiment reflected a broader concern regarding the potential economic ramifications of such tariffs on a sector already facing challenges.
Industry experts have expressed uncertainty regarding the practical application of the tariffs. For example, it remains unclear whether films like "Mission: Impossible – The Final Reckoning," primarily filmed in the United Kingdom, would fall under the proposed tariffs. Such ambiguity has left entertainment companies on edge, as they navigate the complexities of international film production.
Trump's comments about the film industry being a national security concern have also sparked discussions about the implications of this viewpoint. If foreign films are deemed a threat, it raises questions about the future of global collaborations in the film industry, which have historically benefited from cross-border partnerships.
In the context of declining domestic production, the announcement comes at a time when on-location shooting in Los Angeles County has dropped by 22% year-over-year in the first quarter of 2025. This decline has raised alarms about the sustainability of Hollywood's economic model, which relies heavily on both domestic and international productions.
As the day progressed, analysts noted that the market's initial panic might not reflect a long-term trend, but rather a reaction to the suddenness of Trump's announcement. Investors are likely to remain vigilant as they monitor developments surrounding the proposed tariffs and their potential effects on the industry.
In addition to the tariff announcement, Trump indicated that he has trade deals lined up with multiple countries that may be revealed soon. He also mentioned plans to reduce the current 145% tariff on Chinese imports, suggesting a possible shift in trade strategy. This broader context adds another layer of complexity to the situation, as companies must navigate both domestic policy changes and international trade dynamics.
In summary, the proposed 100% tariff on foreign-produced films has sent shockwaves through the entertainment industry, prompting significant stock price declines among major players like Netflix, Disney, and Paramount. As the situation unfolds, the future of the American film industry remains uncertain, with industry leaders and investors closely watching for further developments.
