Right Symptoms, Wrong Diagnosis – Newsweek

When President Donald Trump warned the U.S. film industry was “DYING a very fast death” and that he wanted to make Hollywood great again, the doctor may have been noticing some very real symptoms in the patient. But his prescription—to levy 100 percent sanctions on “foreign made” films (whatever that actually would mean in practice)—is merely a slogan and not a fix to actual problems, some of which are facing us right now and some of which are looming.

Hollywood is a national treasure. American films—not only films made here but also films about this country—are a huge “soft power” asset, creating dreams and luring investment and visitors.

But not all is well in Tinseltown.

Consumer behavior is shifting. People watch films on streaming in their living room and less in the theater. Foreign markets that used to be hungry for anything made in the U.S.A. now demand local films with local stars and with a distinct local flavor. And as new generations supplant the old, new habits become more powerful. Will the TikTok generation have the interest or patience for a long film, or will their “likes” be forever impacted by their life experience of short videos on the phone?

Technology is creating revolutionary changes: Artificial Intelligence transforms the way we write and create. Computer-generated graphics vary and subvert the whole idea of sets and shooting and create a whole new way of storytelling.

And, yes, foreign competitors and overseas locations are challenging American norms and tempting American producers. From new ideas to innovative tax incentives, the Hollywood way is no longer the only way.

Slapping on tariffs is not the right medicine, however.

First, it is unclear if the president even has the authority to levy tariffs on films. And even if he does, what exactly would it mean? Doubling ticket prices? Increasing production costs if a film has some foreign content? And how, exactly, would that be defined? Would it apply only to films made by the big studios for theater use, or would it apply to streaming platforms like Netflix and Amazon, which increasingly produce original content?

Worryingly, a tit-for-tat tariff war over films could hobble American content creators in overseas markets, just the places where they need to grow.

Instead of the stick of tariffs, America needs the carrot of investment and incentives.

We need investment in technology to ensure that our innovation in the creative industries is ahead of that happening elsewhere.

And since, yes, other countries are using tax incentives to help their film industry and to lure U.S. producers, we need to play that game too and play it better.

The film industry focuses on the costs of production. Tax breaks could help that. Tariffs wouldn’t solve the problem.

Making a film in the U.S., which lacks federal tax incentives of the sort found in the U.K., Europe or Australia, can be 30 percent to 40 percent more expensive than doing it there. Add to that the cost of U.S. crews, which are pricier than their international counterparts, and even slapping on tariffs might not make the difference to keep production at home.

Exchange rates mean a production house’s dollars go a lot further in Canada or Australia. Tariffs won’t fix that problem either.

And remember, film production is a very risky business. There’s no guarantee a film will make money (in fact sometimes it even seems the guarantee goes the other way). A lot of television is being co-produced with production companies in multiple countries to spread the risk. A tariff situation could kill those deals. Who would take or share the risk?

Instead, Congress should pass a law with federal incentives for film studios. This would be a positive act, far less disruptive and destructive than tariffs.

Not only is the film industry vital for America’s “soft power” influence in the world, but it is a huge driver of local economies. It creates jobs, injects revenue, and can even boost tourism. Productions can also lead to infrastructure development and increased tax revenue for state and local governments.

Film and television productions require a wide range of personnel, from actors and directors to technicians, catering staff and transportation services. This creates jobs and provides wages to residents, directly pouring money into the local economy.

Film crews need accommodations, food, transportation and other services, boosting revenue for local businesses like hotels, restaurants and car rentals.

In some recent examples, Marvel’s Black Panther involved more than 3,100 local workers and generated more than $26.5 million in wages in Georgia. In California, 20th Century Fox’s This Is Us contributed more than $61.5 million to the state’s economy. And in New York, films like The Post and The Greatest Showman collectively contributed more than $108 million to the local economy.

So President Trump is absolutely right that the industry should be—needs to be—helped. But let’s make Hollywood great the right way, with investment and incentives. Not with tariffs, which could choke off the very growth we need.

Bryan Sullivan is an attorney who has represented high-profile clients in entertainment, intellectual property and corporate investments.