Can Tariffs Keep Film Jobs in the U.S.? with Will French

Welcome back to another episode of On Production. I'm Cameron Woodward and today I'm joined once again by Will French. Will is a pioneering figure in film and television finance, instrumental in shaping the US film tax credit market, and now serving as senior managing director of film and television finance at Fallbrook Financial Services. He's overseen hundreds of projects, helping producers navigate the complexities of state and federal incentives, audits, and financing structures. The last time Will was on the show, we dug into some really big, the last time Will was on the show, we dug into some big picture questions, things like what incentives are being offered overseas or how would a tariff even work in the age of digital transmission or 

How much cheaper is labor in markets like Eastern Europe? And finally, what details, if any, were known about President Trump's proposed 100 % tariffs on foreign films? We also touched on broader themes, like the relationship between labor rates and guild strikes, the shortcomings of Section 181, and the fundamental differences between tariffs and incentives. That conversation really laid the groundwork, but now the issue is back in the headlines. President Trump has doubled down announcing his intent to impose a 100 % tariff on all films produced abroad and brought into the United States. It's a dramatic proposal raising questions about the legality, feasibility and the future of global film production. So today I want to use Will's framework to guide us through the heart of this debate. Will, thanks for joining me.

‍

Will French (01:47.978)

Cam, thanks for having me here today. This is obviously a hot button issue right now. It is currently affecting filming throughout the US and throughout the world. And it's gonna be interesting to watch this play out. Today, for purposes of our conversation, this is gonna be very much nonpartisan. We're going to talk about how tariffs work, how they could be applied to film, not taking a position as to does it make sense or not necessarily, but really looking at how a tariff would have impacts in the film industry and what the potential outcomes would be.

‍

Cameron Woodward (02:22.296)

That's fantastic. Well, let's start out with, you define the scope of the problem for us?

‍

Will French (02:27.872)

Sure. The problem is that we have production that's been migrating overseas. And in large part, it's because of two main factors. One is overseas governments are offering tax incentives. So that's a nice draw to them. And two, the cost of labor is less overseas than it traditionally is in the U.S. If I think back to through most of my lifetime, things were cheaper to produce in China and Japan.

‍

Labor is less expensive for film production in Eastern Europe. It's just a fact. The cost of producing films is higher in the United States and things have probably gotten a little bit worse since our guild strikes a couple of years ago. In fact, I did a little, I checked with my research assistant, which is an AI agent, and I asked, what has been the impact of the guild strikes on production costs in the U.S.? And here's what I found out.

‍

The WGA and SAG strikes from 2023 have made it more expensive to make movies in the U.S. The new labor contracts significantly increased minimum pay, residuals, bonuses for streaming hits, required staffing minimums for writers, and protections and compensation structures concerning artificial intelligence use, which all contributed to rising costs for studios and producers. Studios now faced an added annual cost estimated between $400,000

‍

and $500 million $600 million collectively across Hollywood, prompting changes like fewer high-profile cast members, reduced location shooting, scaled back budgets, and productions have increasingly moved outside of the U.S. to control costs. Cheaper labor outside the U.S., production is moving. This is, if you ask anybody in the industry right now, they can verify it.

‍

things are slow at the high level productions, the larger budget productions. I recently was talking to a lawyer who has one of the preeminent law firms in Beverly Hills at the Toronto International Film Festival. And he says that they're giving up space in their law firm because things are so slow, they can't sustain the same level of employment with their team as they used to. So the problem is real. Now, tariffs,

‍

Will French (04:53.194)

do work to when you are trying to fix an imbalance in pay scales domestically versus internationally. If you are making motorcycles in the United States and if foreign motorcycles are cheaper because it's cheaper to hire labor to assemble the motorcycles overseas, when you put a tariff in place, it makes the cost of the foreign motorcycle more expensive than the cost of the American motorcycle.

‍

which is better for the American manufacturer. The trade-off, it comes with higher prices to consumers in the United States. So we as consumers pay more money, but at the same time, we start to migrate jobs back into the United States. So that's the trade-off. Which do you want? Do you want lower prices because you can access cheaper labor overseas, or are you willing to tolerate higher prices in exchange for creating more jobs in the US?

‍

That's the analysis that the economists out there need to be doing right now. That's how tariffs work and tariffs generally do work in most manufacturing industries.

‍

Cameron Woodward (06:03.758)

Well, let me ask you this, if implemented, would tariffs in your opinion or in your view actually redirect production back to the US or are they aimed at the wrong part of the equation?

‍

Will French (06:17.632)

So again, what we just talked about was a situation where we're adding fees and duties to imports, imports that were made overseas where things were less expensive and then brought into the U.S. The American film and television industry is an export industry and always has been. It represents a significant portion of the overall U.S. trade surplus.

‍

We make films and we make television shows in the U.S. and we export them overseas. So that's a really important point for us to remember here. When it comes to film and television, the U.S. is a net exporter, not a net importer. The benefits of that are huge. If you think of the last hundred years, the fact that the United States has been the source of a lot of the film and television content that is been distributed around the globe is tremendous. I think back to my childhood when I first saw the movie Top Gun in movie theaters, and I will tell you that coming out of that experience, I thought about going into the military and becoming a naval aviator. You know, it is real the impact that movies and television shows can have on people. Think about what the world might be like today if for the last hundred years,

‍

most of the film and television content was coming out of the Taliban, for instance. I think we can all agree that this world might look a whole lot different if that had been the case. So when the current administration talks about things like tariffs are important for national security reasons, there's actually some truth to that. The United States is better off exporting content about United States

‍

morals, ideals, freedom, democracy, trends, products, tourism to the rest of the world. Then we are importing it and seeing what, know, seeing the content that's made in jurisdictions that we might not philosophically agree with and things like that. So we are a net exporter. Exporting is very good. If you're going to put a tariff in place on film,

‍

Will French (08:41.322)

How do you generally do it? Well, unlike most goods that have to be brought into the United States, think of the customs process, if you will. If you've ever gone out of the country, you come back in, you have to tell a customs official what you bought. Why do you do that? Because they might say, we're going to tax you on what you brought into the US, just as though you had bought those things in the US, and you get a certain duty-free allotment.

‍

When it comes to a film, it's way different because a film is a digital asset these days for the most part. So it's not like a cargo ship is pulling up at the port of Los Angeles with containers full of films to be unloaded, which can then go over to the customs warehouse and be assigned a duty, a fee, a tariff to be imposed and then paid right there before customs releases the film into the United States. Not at all. The film can be distributed electronically without ever touching a border, without ever having a customs official see it or come across it or be able to control it. If you really want to think about how this can be done, know, think about little Johnny in Iowa. Little Johnny in Iowa wants to watch something that was produced overseas. He can get on his iPad, use his VPN, log on to his Britbox subscription over in the UK and watch as much British content as he wants. And nobody in the US is going to know that Little Johnny did it or be able to make Little Johnny pay the tariff for going and watching British content. So you have this issue of one, it's kind of the wrong tool for the problem. We're an exporter, not an importer. And two, you have this enforceability issue that gets subverted by little Johnny in Iowa with his iPad. And so it makes the concept of a tariff very difficult to actually implement to solve this problem.

‍

Cameron Woodward (10:56.0)

that's fascinating. So what happens if we try to use a tariff anyway?

‍

Will French (11:03.754)

So, okay, so let's say we try to do it anyway, and I'm trying to think of how we might do that. You know, on the one hand, you might have a surcharge that's applied to ticket prices at the movie theaters. This is a foreign film, or this is a film that was not made in the United States. Therefore, the consumer has to pay a higher ticket price to go and see this film. That is one practical way that you actually

‍

could impose a tariff on the film industry. The thing is, do we really need any more reason not to go to the movie theaters? What's gonna happen? Is that gonna be the last nail in the movie theater coffin? It very well could be. I don't know that that is, even though potentially it could be applied, that that's a good idea. You could put a tariff on the studios and you could say,

‍

If you made films overseas, now we're going to charge you for making that film overseas. And we're going to make you pay us, pay the U.S. government the same value that you got out of the foreign incentives that you got. How do you check that? I guess you could have the IRS audit the studios to make sure that they are being truthful about what they got from foreign jurisdictions and that they're paying that over to the customs department. But remember,

‍

The studios aren't just the ones making these films. Often they're just buying a film. They're buying it and they're distributing it. They're putting it through their system to get it out into the hands of the consumer, into the eyes of the consumers. So is a studio supposed to be able to verify that an independent film that was made in Spain received incentives? And if so, what level incentives did they get? Now you're putting that

‍

burden on the studios, the distributor as a buyer of that film with no way really to verify it. And certainly I don't think you could expect to get a customs report or an IRS report every time before you have a studio or a streamer buy an independent production. So we got some real problems here about how this could be done, even if it were intended to be done. What I'd like to do now is

‍

Will French (13:20.192)

kind of, let's put the how question aside and let's look at, let's play a little game. Let's play a game of chess. What we need to figure out is if the United States imposes a tariff and makes the first move there, what are the moves that the other players are going to make in response? So let's say move number one.

‍

US imposes a 100 % tariff on foreign-made films to the extent of what they receive from foreign governments. Move number two is going to most likely come from the foreign governments themselves that offer these incentives, and they're going to impose a reciprocal tariff on anything that's made in the United States. Why is that important? It's important because since we talked earlier about the US being a net exporter,

‍

It means that a lot of the revenue that our film productions, production companies, studios and streamers make in the U.S., those revenues come from overseas. In many cases, it's up to 70 % of the total revenue of a project comes from overseas distribution. So we're trying to find a way to make it more likely that a film is going to shoot in the U.S.

‍

And what we just did because the foreign governments enacted reciprocal tariffs is we imposed, we caused a tax to be imposed on our own exports. So we're trying to tax imports because of the reciprocal move from the foreign governments. Now our exports are being taxed in a big way and they, because it's 70 % of the overall revenues, foreign governments actually have

‍

the bigger bargaining chip in this equation. Okay, what is move number three? Move number three, I would say, is from a U.S. production company. Now they have to produce, if they're going to produce in the U.S., it's going to be more expensive to make the film. And as they distribute it across the globe, now they're taxed on their distribution. So they're going to have lower revenues, higher production costs,

‍

Will French (15:41.129)

lower revenues, what is that company going to do? The company is going to move its production and distribution business overseas. It's going to eliminate that U.S. tax nexus, and it's going to work completely out of the country. It's going to make their films. They're going to make their films for less money, using cheaper labor in countries that have tax incentives, and then they're going to distribute those productions

‍

more reliably and predictably in all the other countries around the world, other than the United States, which are presumably not going to be tariffing each other. So then what they have is a system where they can model out how to produce films and how much revenue they're going to get. You might say, but they've just lost the ability to distribute in the U.S. and isn't that valuable? It is valuable.

‍

30 % of their potential revenues could be coming from the US. 70 % overseas. You can see why they're incentivized to go overseas. So what do they do? They fall back on Little Johnny in Iowa. And instead of putting their films in US theaters and first run on streaming platforms owned by US, by American companies, they're going to create streaming platforms overseas so that Little Johnny with his VPN can log on to his account in Spain or the UK or Malta or wherever else they want to base this platform and they can still get the revenue out of Little Johnny and out of the United States. So the net impact of that, you know, who wins? I think you could say, I think some will say the foreign governments win. I don't think that's right. I think the foreign governments benefit. because the US film industry will be distributed out around the rest of the world. But what's clear is that in that situation, the United States loses. We lose one of our chief exporting industrial sectors. We lose the ability to take our content, our culture, and export it to the rest of the world for them to see everything that's great about America.

‍

Will French (18:02.848)

We lose our jobs, all of our guilds, our studio facilities, you know, presumably would be empty at that point. All of the production service companies from payroll companies, Cam, sorry, to grip and electric, to wardrobe companies, to sound stages, that business is going to be gone and dry up. And, you know, we've invested a lot in that as a country and as the individual states, especially over the last 20 years with the various state tax incentive programs. So I don't know who wins the chess match in particular. All I know is that the United States loses in that situation.

‍

Cameron Woodward (18:45.71)

If tariffs are not necessarily the right policy lever here, in your opinion, having been in this space for quite a while, what do think the US and the industry should be doing to strengthen domestic production? Is it about incentives, labor policy, federal coordination, or something else?

‍

Will French (19:04.468)

I think what we've seen in the last 20 years is that incentives drive production activity. And you and I saw it in the early 2000s when the various US states started to enact their own programs. And that started bringing business mainly from Canada back into the US and also distributing business that had been in California, in Los Angeles to the other states.

‍

Right now, Georgia has one of the top or has had one of the top film industries anywhere in the world. And that's because of the incentive that has been offered by Georgia since about 2005 or so. The rest of the country has caught on. There are 41 US jurisdictions. Now there are at least that many international locations that offer tax incentives as well. And when you couple those incentives with lower

‍

wages in those countries, you end up with a pretty attractive reason to go and shoot overseas. So what the U.S. really needs to do is to pair a federal level incentive with the individual state program incentives that are offered around the country. Canada has this. There's a federal Canadian incentive and then you have separate provincial incentives.

‍

Australia has this, there's a federal incentive and then there's separate state incentives in Australia also. This is not uncommon. What's strange is that we at the federal level in the US don't want to get involved, don't want to incur the cost of doing that, and we're willing to lose one of our top exporting industries in the process, which doesn't really make sense. So what we need is a good, easily trackable

‍

easily enforceable tax incentive. Probably that's going to be one that's based on payroll like the Canadian incentives are as well, which will add just a little bit of extra gravy to bring those productions and that production activity back to the U.S. and level that playing field caused by lower wages overseas.

‍

Will French (21:29.472)

That would do the trick. It wouldn't have to be that significant. Maybe it's a 5 % or a 10 % payroll incentive, and that would bring production coming back to the U.S. We're currently relying upon this weird section of the Internal Revenue Code, which is referred to as Section 181, which is kind of like being used like a square peg through a round hole to try to get some benefit at the federal level by shooting in the U.S.

‍

And really, when it comes to the tax code, if you're banging a square peg through a round hole, you're going to end up with a really big problem down the road. And so let's fix this now and put a good federal level U.S. in place and start to look at bringing that production business back to the States.

‍

Cameron Woodward (22:20.302)

Awesome, well, thank you for jumping on with me to sort of dig into the details here. It's a really important topic and it is so welcome to able to spend time with you to really try to understand the nuance and the ramifications of these types of decisions for filmmaking in the United States.

‍

Will French (22:40.436)

Cam, it's always a pleasure to be with you. Hope this has been helpful. I'm always here if you have questions about incentives, tariffs, all of that stuff. So thanks for having me today.

‍