Tariffs and the movie business: Loss of US soft power might be the primary result

Omdia view

Summary

The tariffs applied by the US government to nearly all countries in the world are now in force, and their effects will soon start to become apparent. The tariffs are aimed at goods, not services, so they will not immediately impact the flow and sale of movies and TV programs, but there will be impacts on areas of the film business, notably the parts where equipment is needed, whether for productions or cinema exhibitors. In the longer term, these measures will lead to a loss of US soft power around the world.

Film production is all about equipment

For film productions taking place in the US, the tariff effect could be to switch the origin of cameras, lenses, and lighting to American-made versions. Arri and Sony equipment are popular for big-budget projects but so are Red and Panavision, US companies. A way around bringing in new equipment would be to rent equipment that already exists and is in the US. However, over time, equipment rental providers may also favor US-made equipment as they replace inventory. However, as Omdia’s research shows (see Figure 1), the most favored movie camera brand for high budget movies is Arri, a long-established German company, and mostly with Panavision lenses.

Figure 1: North America ‒ choice of principal camera for top 30 movies (excluding animated titles) Source: Omdia

A similar scenario is true for the indie sector, where research by Y.M.Cinema magazine shows that 25 out of 37 feature films submitted to Sundance Film Festival in 2022 were also shot on Arri equipment. While this figure is lower than that seen among major studios, it still represents a clear majority. This highlights the complexity of replacing such equipment. In the context of high tariffs, this situation is likely to limit equipment choices, raise costs for producing or renting US-made equipment, and potentially lead to inferior product quality than before, although this outcome is not certain.

Panavision and Red, both separately and working collaboratively (Panavision Millennium Digital XL 8K is made by both companies), are US companies. However, some of their components are sourced from abroad. As a result, rising component costs could lead to an increase in prices for US-made production equipment. These companies may also take an opportunistic approach by raising prices in response to higher costs from their non-US competitors.

Directors and cinematographers often have preferred cameras for their projects, and if these need to be imported from a non-US country with substantial tariffs, it could prompt considerations about filming abroad. While this is unlikely for most major productions, where equipment costs represent a relatively small portion of the overall budget, it remains a possibility. However, for smaller-budget projects, such factors are more likely to influence decision-making.

Over time, US manufacturers of movie-related equipment will need to adjust their supply chains or absorb the increased costs into their pricing. Foreign manufacturers will need to consider whether to establish a manufacturing plant in the US to avoid the tariffs. Whether equipment is owned or rented, there will also be the option of keeping production equipment going longer, spending more on maintenance, increasing second-hand inventory, and reusing end-of-life equipment for spares.

Globalization has enabled supply chains to work around specialized expertise across different countries, which is a process that has evolved through significant investments of time, money, and knowledge. Replacing such deeply interconnected processes is simply not practical in the short or medium term.

Bausch + Lomb (B+L) is a US-Canadian company that specializes in lenses, including those for movie cameras, and with its headquarters in Canada, it could be affected. Classified as a healthcare company focusing on contact lenses and related products, B+L has been identified among the top 10 Canadian companies most vulnerable to the US tariffs, with 59% of its revenue derived from the US, according a study from Syntax Data. Although B+L is no longer active in the movie industry, some of its legacy lenses remain available for sale or rent. Notably, the recent horror title Nosferatu was shot partially using B+L Baltar lenses to achieve a period-specific feel.

Visual effects (VFX) and editing, as well as animation, are increasingly reliant on high processing power, and most of the relevant technologies are made in Asia, which will mean higher costs for US companies to invest in new equipment and upgrade their equipment to stay competitive. Regular investment in, as well as the choice of, equipment is of high strategic importance to VFX, mastering, and post-production companies.

The uncertainty of the situation is likely to encourage all affected producers to pause for reflection, assess any impact, and decide what strategy to take in terms of shooting locations. If it has to be shot in the US for whatever reason, this could increase production costs and either force changes to the project or, in the worst-case scenario, render the project unviable.

Runaway production

While not strictly related to the tariff debate, the broader trend US film production shows a gradual shift abroad, commonly known as runaway production. This move has accelerated in recent years due to high labor costs in the US, and an increase in generous tax incentive systems around the world. This has driven major US studios and smaller producers alike to move their film production to third-party countries. Given the global nature of the film industry, it is not hard to envisage a scenario where this is noticed by the federal government, which may then explore measures to favor the domestic economy in the current climate of moving manufacturing back to the US.

Overall, annual Los Angeles feature production was up 18.8% in 2024, though it lags behind its five-year average by -27.6%, according to a recent report by film agency FilmLA (see Figure 2).

Figure 2: Feature film shooting days in Los Angeles, 2017‒24 Source: FilmLA

State authorities have already responded to this ongoing production exodus. In 2025, the Californian governor put forward plans for an expansion of the California Film & Television Tax Credit Program from $330m to $750m per year to try and stem this outward flow.

Canada is highly favored as a shooting location for US films, and this relationship could be under threat if a fully fledged trade war breaks out between the North American neighbors. This will affect players such as Pinewood Canada (the UK studio group that set up in Toronto in 2009 and took full ownership of the site in 2023). Amazon took a long-term deal on five sound stages in Pinewood Canada in 2024.

Canada and US are also frequent co-producers, and the current attitude of the US government is likely to drive Canadian producers to other production partners, building new relationships and strengthening existing ones. Likewise, for Canadian audiences, this situation may turn them away from American content to favor local and international sources. Indeed, Mark Carney recently vowed to increase funding to the state broadcaster CBC by C$150m if elected in the upcoming election, largely in the light of “US attacks on Canadian institutions and culture.”

Tariffs may hamper cinemas to invest in upgrades

There will be no immediate impact on the flow of movies into cinemas as they do not all under the category of “goods.” However, away from the screen, a venue needs to be equipped, and cinemas are investing heavily in technology ‒ everything from projectors, servers, and sound systems, to premium technologies such as immersive motion seating, laser projectors, LED cinema screens via actual screens, seats, point-of-sale (POS) systems, ventilation, and heating systems. Unpicking the supply chain behind this and identifying where these things are actually made, or discussing these issues with their technology partners, will be key for US cinema operators looking to invest in new equipment.

In recent weeks, for example, major exhibitor Regal has agreed a deal for 4,000 projectors from Belgian projector company Barco. Also, rival AMC is seeking to invest over $1bn in a range of premium experiences over the next few years from a variety of vendors. Barco does have a R&D and manufacturing site in the US, but any imposition of tariffs on incoming equipment would reduce the amount of equipment that US exhibitors can actually install at a time when investment is crucial to keeping cinema relevant in a crowded leisure market.

Long-term view for Hollywood: Loss of US soft power

In the long run, these tariffs could pose a significant blow to US soft power, particularly in Hollywood. The market share of the major five US studios is already in decline in Asian markets, influenced by political factors (such as the Chinese market) and shifting audience preferences toward locally produced films. Recent reports also suggest that China may be considering banning Hollywood imports as a retaliatory measure in the ongoing tariff dispute between the two countries. While this would have been a more severe blow six years ago, it would still impact major studios.

In 2024, the five leading US studios accounted for 51.3% of the global market (see Figure 3), highlighting the importance of local films around the world, which now take up almost half of the box office. However, this figure marks a decline from the over 60% share that US studios held in the previous decade. This downward trend could accelerate further as the effects of the tariffs take hold.

Figure 3: Annual global box office performance of major US studios, 2010‒24 Source: Omdia

While the more mature film markets in Europe, Australia, and Latin America are still driven by Hollywood, the newer markets in Asia and the Middle East are increasingly fueled by their own local film industries, with China, Japan, Indonesia, Korea, and Thailand all seeing local movie market shares of 50% or above. In the case of Indonesia, for example, domestic movies accounted for 20% of the market in 2015, rising to 63.5% in 2024. In China, probably the world’s largest cinema market in 2025, local market share is around 80%, leaving much less room for Hollywood from the 35‒40% pre-pandemic.

Adding to this shift, animosity toward the US following the implementation of Trump tariffs may further weaken Hollywood's presence in these regions. Given that the Asia Pacific region accounted for nearly 40% of global box office revenue in 2024, this poses serious concerns for studios reliant on global success. In fact, hostility toward US policies could also lead audiences across various media platforms to turn away from US programming, which would be detrimental to all global US media groups including streaming platforms.

However, this situation presents an opportunity for local investors to allocate more funding toward domestic film and TV production, as a way to increase interest in this local content and potentially push US production further out of these markets.

There is a longer-term possibility that this unilateral action by the US could spread to other sectors and business models, potentially triggering a wider economic recession with far-reaching effects on the media industry. For now, the precise impact of these tariffs remains uncertain, and unintended consequences are inevitable, as much depends on the real objectives of the tariffs. The stated goals appear somewhat contradictory, as the aim of encouraging domestic manufacturing is not always compatible with raising tariffs or initiating negotiations with other countries over tariff levels. These objectives are likely to become clearer over time.

Appendix

Further reading

“China considering a ban on Hollywood movies in tariff escalation” (April 2025)

Author

David Hancock, Chief Analyst, Media & Entertainment

[email protected]