100% US Film Tariffs: How would they Impact UK Production & AI Innovation?

May, 2025
AIMICI Team

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Over the past four weeks, we’ve witnessed an erratic approach to US tariffs—on again, off again; some goods exempt, others included; immediate enforcement in some cases, postponed in others. The latest announcement, targeting foreign films, presents new concerns—particularly for UK creatives using AI in filmmaking.

Tariffs impact more than just pricing. They influence the cost of film production equipment (e.g. cameras and sound gear), shape the availability of AI tools, and shift preferences between US and non-US providers. On a broader scale, they affect the economy and policy direction. But the most recent developments point to tariffs being designed to directly hit the film industry

Trump’s Proposed Film Tariff, Explained

As of 5 May 2025, the Trump administration has proposed a 100% tariff on all non-US films sold into the United States. In effect, this would double the price of any foreign film shown on US soil—effectively shutting out films from the UK, EU, Canada, Australia, India, and elsewhere.

The rationale offered: to promote films “Made in the US, for the US,” and to reverse Hollywood’s recent productivity decline. However, this logic falls apart under scrutiny. It disregards how global the film industry is, and how much US audiences enjoy international films—think James Bond, foreign settings, or diverse storytelling. It also fails to address the real causes of Hollywood’s struggles: technological disruption (including AI), labour strikes, and shifting viewer habits.

Restricting foreign films won’t revive US film production. What’s needed is systemic change—something we’ll revisit shortly.

Will the Film Tariff Actually Happen?

It is unlikely that these tariffs will be implemented in their current form. Here are five reasons why:

Lack of Clarity: It’s unclear how the 100% tariff would be applied—at the production, distribution, or exhibition stage. This vagueness makes enforcement impractical, especially given the different business models of cinema and streaming.
Impact on Local Production: The global nature of filmmaking means tariffs could inadvertently harm US-based productions that rely on international talent, tools, and financing. It’s optimistic, to say the least, to think that even high-profile advisers like Sylvester Stallone can guide tariff policy across complex areas like international tax, employment, and capital flow.
No Film Trade Deficit: The US runs a surplus in film trade—it exports more films than it imports. Targeting film imports does not address a trade imbalance.
Digital Distribution Complexity: Most films are now distributed digitally. Tariffs have so far targeted physical goods like electronics and hardware. Extending tariffs to digital services could trigger a damaging trade war—especially since the US dominates global digital services.
Inconsistent Tariff Policy: The recent pattern of tariff U-turns suggests this too may be posturing or part of a larger negotiation tactic.

That said, the proposal should not be dismissed. Reports suggest these tariffs may be used as leverage in US-UK trade negotiations. One area that could come under scrutiny is the UK’s film tax relief schemes, such as AVEC and IFTC, which the US may perceive as unfair subsidies. However, rather than trying to scrap these reliefs, US leadership may instead push for reductions in UK digital taxes targeting American tech firms. Either way, the US-UK relationship looks to be deliberately tested, causing further complications and unrest in industry.

Conclusion: Is there a Silver Lining?

Overall it is unlikely that the tariff will happen, especially in the way it is currently being proposed.

But as the US market becomes more restricted, others may open. The UK’s investment in high-end production studios positions it well to serve international demand. For instance, China’s quota on foreign films (20 per year) and growing appetite for English-language content may create fresh opportunities for UK productions.

Nonetheless, we can’t afford to not address the ongoing issues in the industry. AI & Technology will continue to evolve, productions will continue to be pressured to do more with less, and it will continue to be an international industry, where each nation has a role to play. The UK cannot fall behind.

The Bigger Picture

It’s well recognised by insiders that the US film industry’s current challenges are not caused by foreign talent or international subsidies, far from it. But this US-led industry shake-up goes to show that it is time for the UK film sector to take real action to protect it’s future prosperity.

How can the UK take urgent, radical steps to support the industry? Two key actions need to be taken;

Modernize Infrastructure for Productivity Gains:
Embrace, don’t fear, new technologies like AI. Used wisely, AI can enhance creativity, democratize access, and dramatically boost output. However, it must be deployed responsibly. We support:
- A transparency regime for AI use—linked to tax incentives, funding, or awards.
- Upskilling UK creatives in global production tools, including a comparative understanding of using AI from the US vs. China.
Address Copyright Concerns:
The UK government must create a legal framework that gives confidence in using AI-generated outputs. Copyright enforcement is key, especially as global trade tensions rise. We support adopting elements of the EU approach, which mandates transparency and accountability in AI usage.