By Paul Sandle, Michael Kahn, Byron Kaye and Dawn Chmielewski
LONDON/PRAGUE/SYDNEY/LOS ANGELES (Reuters) -“Star Wars: Starfighter” is filming in Britain, soundstages in Hungary are packed and post-production houses in Australia are humming, as the global film industry keeps rolling despite U.S. President Donald Trump’s renewed threats to impose tariffs on movies made outside of the United States.
Trump has proposed levying a 100% tariff on films produced overseas to stem the loss of film jobs to production hubs around the world, reviving an idea he first broached in May.
The initial call for tariffs jolted the film world, and temporarily halted projects and international movie finance deals as producers evaluated the potential impact of the levy on each project’s financial viability, two sources familiar with Hollywood motion-picture financing told Reuters.
This time around, the reaction has been more muted.
“Other than the initial flurry of ‘Oh, he’s said it again,’ people are not taking it as seriously as they did the first time around,” said Lee Stone, a partner at London law firm Lee & Thompson, who worked on the Emmy-winning Netflix show “Adolescence.”
Trump initially called for a 100% tariff on movies produced outside the country in early May, to stave off the “very fast death” of the American film industry as incentives lured filmmakers to production hubs around the world. The announcement – just weeks before the Cannes Film Festival – caused a panic.
“It was terrible timing. Everyone was saying, ‘What’s going to happen?'” said Stone, noting that Trump’s threat resulted in temporary paralysis. “I’m not getting the impression that there’s the same pause this time.”
Newly released data from industry researcher ProdPro reveals that while overall spending is down 15% from last year, amid a pullback in scripted television series and big-budget feature films, there is no evidence that Hollywood is abandoning global production hubs.
“We’re not seeing anything in the data that suggests studios are opting to film more of their production in the U.S. because of concern about the tariffs,” said ProdPro CEO Alexander LoVerde.
The U.S. remains the industry’s largest production hub, accounting for $16.6 billion in spending over the last 12 months, according to ProdPro. However, Hollywood studios and streaming services spent even more – $24.3 billion – on film and television projects produced outside the U.S. over that same period, ProdPro reported, as they took advantage of tax credits, lower labor costs and world-class soundstages.
The United Kingdom has become a major beneficiary of the Hollywood exodus, attracting $8.7 billion in film and scripted TV spending over the past year, including major film productions like “Star Wars: Starfighter,” the much-buzzed-about next entry in the “Star Wars” saga set for release in May 2027. Canada comes in a close second with $6.4 billion, according to ProdPro’s most recent report on production trends.
Other regions – Australia, Ireland, Hungary and Spain – together accounted for nearly one-quarter of all production.
COVID-19 SUPERCHARGED PRODUCTION EXODUS
The COVID-19 pandemic and the Hollywood strikes by U.S. writers and actors supercharged the exodus that began years earlier.
“Australia became a bit of a production bubble where particularly in Queensland, productions could continue even as the rest of the world shut down,” said University of Melbourne film expert Kirsten Stevens.
Prague increased its tax breaks from 20% to 25% in January, while Britain offers relief of 25.5% on qualifying films and TV productions, with a higher rate for animated films and a new credit for smaller independent films.
In places like Central Europe, a deep filmmaking tradition and lower labor costs have attracted a long list of Hollywood films including the Russo brothers’ “The Gray Man,” Netflix’s Oscar-winning “All Quiet on the Western Front” in the Czech Republic, and Warner Bros Studios’ “Dune: Part Three,” which began shooting this summer in Hungary.
“Hungarian soundstages are currently operating at full capacity with both international and domestic productions,” Csaba Kael, government commissioner for the development of the Hungarian Motion Picture Industry, told Reuters.
Any change in U.S. trade policy would take time to implement, Kael said.
Hollywood studios have found that distributing work across multiple locations can accelerate the production timetable, allowing films to be completed faster and cheaper.
“It’s not uncommon at high-end films that a bunch of work would come to Australia, but a bunch of work also might go to New Zealand and to London and to somewhere else,” said Mike Seymour, Emmy-nominated visual effects specialist and lecturer at the University of Sydney.
“Sometimes the film is being worked on literally 24 hours a day because of all the time zones,” he said.
STUDIOS PUSH FOR U.S. TAX INCENTIVES INSTEAD
For the moment, it is business as usual for filmmakers, said Stephen Weizenecker, an entertainment lawyer with Barnes & Thornburg in Atlanta. They are hoping to avoid any interruption that throws off the schedule of a production, which can result in actors, directors or even a filming location being unavailable.
“The film industry dislikes uncertainty,” Weizenecker said. “Once it starts to hesitate, it means a project stops altogether.”
A coalition of American film industry unions and guilds, joined by veteran actor Jon Voight, has asked Trump to consider implementing a federal tax incentive to put domestic film production on a more competitive footing with incentives offered in other countries.
“What we really want is a national tax incentive that would be more effective than any tariffs,” one studio executive said.
Meanwhile, a bill with bipartisan support, known as the CREATE Act, was introduced in the U.S. Congress this past summer. It would extend a tax deduction for U.S. productions, which is set to expire in December, and increase the cap on deductible costs.
The looming threat of tariffs raises concern about the potential impact on the economy and livelihoods in production hubs around the world, if Trump follows through.
“It is hard for anyone here to understand the likelihood of this coming into effect, but if it did, it would have a huge impact,” said a visual artist in the industry who declined to be named over fears of losing financing. “It would be devastating.”
(Reporting by Paul Sandle in London, Mike Kahn in Prague, Byron Kaye in Sydney and Dawn Chmielewski in Los Angeles; Additional reporting by Lisa Richwine in Los Angeles; Editing by Kenneth Li and Matthew Lewis)
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