Editor’s note: When President Donald Trump proposed to “fix” runaway Hollywood production by imposing 100% tariffs on films shot abroad, Pandemonium Films CEO Bill Mechanic answered Deadline’s call quickly to break down whether such a kneejerk solution could remedy a problem long in the making. A former producer of the Oscars and top executive at Paramount, Disney and Fox, Mechanic spelled out why the tariff solution was folly. Deadline got a ton of reaction and so did Mechanic, who agreed the complex problem deserved a second deep dive. Here it is, and we’re grateful to have it.
Given the number of articles and opinions offered these past few days, it’s clear that many people believe Donald Trump’s tweet about instituting punitive tariffs on movies to help production in the U.S. There are discussions about what is actually subject to the tariff – the whole film or parts of it. How the tariffs might work in conjunction with federal production incentives. Arguments about whether the idea is good or bad. Whether any of it’s real or just his usual bluster and hocus and pocus, without, that is, any real magic.
Like Apate, the Greek Goddess of deception, truth has no role in the Trump universe. Fundamentally, it’s difficult to believe Trump would lift any finger other than his middle one toward Hollywood. Jon Voight’s claim that Trump loves movies (well maybe not Sebastian Stan in The Apprentice), is absurd. Undoubtedly, he has a large base of fans here, but as far as votes go, he barely bothered to campaign in California. This just isn’t where his bread is buttered.
But I understand why people want to believe the offer of help is real, since the state of motion picture production is in critical condition. Production has been hacked at and chopped down by a variety of factors: the impact of the pandemic; the effect of the streamers cannibalizing theatrical exhibition even though theatrical releases make for more successful play off on the streamers; the self-immolation of actions by studios (best example: WB one year released their entire film slate day-and-date with streaming). And while the SAG and WGA strikes dealt with absolutely critical issues, they made the financing landscape even more tenuous.
Put it all together and what do you have? An industry that makes fewer and fewer movies.
The motion picture world of today reminds me of Rio – opulent penthouses (big IP) on one side of the street, and hovels (independent movies) on the other. No middle class in between. Of the Top 10 movies so far this year, the only two, Dog Man and King of Kings, both PG-rated animated films, were produced for less than $100 million (in fact, both less than $50 million). Independent movies have almost all been bullied out of the way.
As a result, work opportunities have dried up, not just here but everywhere. Certainly some of the U.S. situation is due to overseas production, but that’s a secondary factor. Soundstages are empty everywhere. The fact is jobs are scarce because movies are scarce. Many of the most constant sources of film financing have restricted what they fund.
So what do tariffs do to address the problem of less films, more jobs, etc.? As close to nothing as you can get – unless you can’t count.
Tariffs fundamentally do one thing – make imported goods more costly. Usually instituted because of a severe imbalance in trade. Movies are very different in that regard – movies are one of America’s most consistent winners in trade surplus. More than two-thirds of the revenue on major films come from overseas.
Do not miss this point: A tariff may stop something from being made but it in no way at all guarantees it will get made in the U.S.
With all the noise Trump has created from his preceding tariff announcements, the only responses have been an outlined agreement with the UK — one which the U.S. automakers feel is completely unfair to them. A just-announced ceasefire with China at crippling tariff levels has been without China conceding anything! Trump’s nonsensical tariff policy is destroying everything and helping no one. The result is American trade surplus is at a historic low. Wall Street ping pongs the effects based on rumors and projections. Costs are beginning to skyrocket as the costs are passed on.
Do you think for one moment the UK, Europe, Australia, India, Japan and China won’t hatch plans to make it uneconomic to distribute American made films in their countries? Any tariff plan will destroy one of our greatest products in the balance of trade. If that happens, the crumbling economics of film production will be worse than at any point in time. Weakened theatrical, almost no TV or ancillary sales, and no international to speak of.
If Trump wanted to create chaos, he has succeeded.
The point being, even if there is some kind of movie tariff, do not expect the soundstages to be filled. The number of movies being made will further collapse. Independent production will move to the soundstages on Boot Hill. Tariffs don’t help anyone in our industry.
What would be a solution to losing movie production?
Better owners of studios. More movies from streamers flowing through theatrical. Better movies.
Or the thing that makes the most sense, competitive production incentives. Tariffs do not make Los Angeles, Atlanta or anywhere else here competitive. They raise prices. That’s it.
If Trump creates a federal production incentive program, it might, when added to state subsidies, change the landscape. But don’t you think he would have done something for the industries he’s crippled already? I don’t know how true it is, but the commercials I’ve seen in the past few weeks claim that Ford has the most U.S.-based car manufacturing system, yet I just read that Ford thinks the car tariffs will cost them over $1.5 billion in profit!!! How are the farmers being helped? The merchants?
Where do you think movies fall in our megalomaniac’s world? That was the main point I was trying to make. Everyone wants a panacea for the problems ailing our industry. Wish fulfillment is clouding judgment. Trump has no plan to help movies. He hates Hollywood. We’re a revenge target, not an industry that will help him. Look at what he’s done to the Kennedy Center, to the law firms who opposed him, what he’s tried to do to New York, how he said he would not provide federal aid when Los Angeles suffered the worst fires in our history, how he pulled out of climate control and attacks California’s clean air initiatives.
All the negativity aside, change happens only when we will it to happen. Our soundstages are empty, production levels are not only low and narrow in focus. Tariffs will only make matters worse. Incentives are the best chance we have to turn things around, so that’s the effort we should all get behind. With enough support, perhaps the unlikely will come to pass and Washington will act.
