How Trump's new film rule could crush Bollywood in America
What's the story
In a latest development, US President Donald Trump has suggested a 100% tariff on films produced outside the United States.
The move is considered a major threat to the booming market for Indian cinema in North America.
The US has emerged as one of the biggest overseas markets for Indian films, especially Bollywood and Telugu blockbusters.
Trump's announcement has sent shockwaves across global film industries.
Trump's reasoning
Trump framed foreign films as a 'national security threat'
Trump announced the proposed tariff on his social media platform, Truth Social, framing foreign-made movies as a "threat" to national security.
He accused other countries of luring filmmakers away from American soil through government subsidies and incentives.
"It is, in addition to everything else, messaging and propaganda!" he wrote, declaring, "We want movies made in America, again!"
Policy confusion
Lack of clarity surrounds Trump's proposed tariff policy
As the details of Trump's proposed tariff policy remain unclear, distributors are confused and panicking.
It remains unclear if the tariff would apply only to fully foreign productions or to American studios filming abroad, as well.
Likewise, it remains unclear if the policy will extend to streaming services like Netflix and Amazon Prime Video.
Trump's emphasis on the policy taking "immediate effect" has particularly unsettled distributors with foreign films scheduled for release in the coming days.
Halt
The potential impact on the Indian film industry is severe
The announcement has especially raised alarms for the Indian film industry.
With several major hits such as Pathaan and RRR breaking records in the US, the proposed tariff could severely affect distribution.
Indian films, which are becoming increasingly popular among both the Indian diaspora and foreign audiences, could face a sudden halt.
The tariff would double the cost for distributors, making it financially unfeasible for many to continue importing Indian films.
Impact on Indian films
Indian cinema's success in the US faces potential disruption
Indian films grossed over $20 million in the US in 2023, marking a major achievement for foreign-language cinema.
However, with the implementation of the 100% tariff, this lucrative market faces significant uncertainty.
If a US distributor buys rights to screen an Indian movie for $1 million, they'd now have to pay an additional $1 million as tax, doubling their investment.
This could be a huge financial challenge in an industry with razor-thin profit margins.
Regional impact
Telugu cinema is particularly vulnerable to the proposed tariffs
Telugu cinema, which has built a solid distribution pipeline in North America, is especially susceptible to the proposed tariffs.
Many Telugu blockbusters heavily depend on US theatrical revenue and even premiere a day before Indian releases.
A sudden doubling of costs could make it financially impractical for many distributors to operate.
For example, just recently, Nani's HIT 3 crossed $2 million in North America at a rapid pace. Such milestones will become history.
Release uncertainty
Uncertainty looms over upcoming Indian film releases
The uncertainty over Trump's proposed tariffs has frozen deals for upcoming releases. Distributors are reluctant to make new commitments without knowing if the tariffs would apply retroactively.
If OTT platforms fall under the ambit of the tariff, Indian producers could deem digital distribution unviable.
Smaller production houses and indie films, which rely on overseas revenue, will be the first to feel the financial strain.