logo
Effect on Canadian industry could be widespread after Trump threatens tariffs on films

Effect on Canadian industry could be widespread after Trump threatens tariffs on films

Calgary Herald05-05-2025
Article content
The latest salvo in U.S. President Donald Trump's trade war is a threat to slap 100 per cent tariffs on foreign films.
Article content
Article content
In a post to Truth Social Sunday night, Trump wrote: 'I am authorizing the Department of Commerce, and the United States Trade Representative, to immediately begin the process of instituting a 100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands.' He added: 'WE WANT MOVIES MADE IN AMERICA, AGAIN!'
Article content
Trump's reason for the move was that the U.S. film industry is dying 'a very fast death,' and that other countries 'are offering all sorts of incentives to draw our filmmakers and studios away from the United States.'
Article content
The Movie Industry in America is DYING a very fast death. Other Countries are offering all sorts of incentives to draw our filmmakers and studios away from the United States. Hollywood, and many other areas within the U.S.A., are being devastated. This is a concerted effort by…
— Donald J. Trump Posts From His Truth Social (@TrumpDailyPosts) May 4, 2025
Article content
Both points are, broadly speaking, true. Filming in Los Angeles dropped 22.4 per cent in the first quarter of the year, NBC reported. It added that there are economic knock-on effects that include restaurants, retail and support services.
Article content
Article content
Meanwhile, tax incentives are part of the business of filmmaking around the world. For instance, the Film or Video Production Services Tax Credit from the government of Canada provides eligible companies with a tax credit of 16 per cent of qualified Canadian labour expenditures. There are similar credits for both domestic and foreign productions at the provincial level as well.
Article content
America has its own tax credits. Last year, California Governor Gavin Newsom more than doubled his state's film and TV tax credit program to $750 million from $330 million. But there is no national tax credit.
Article content
Charlie Keil, a professor of film and history at the University of Toronto, told National Post that Trump's announcement was 'very short on details' and that it was difficult to know how such a tariff would even work.
Article content
Article content
The simplest example would be a Canadian, French or Chinese film that was looking for distribution in America. 'Those you could see easily … the hundred per cent tariff being applicable,' he said.
Article content
Article content
'But what about films that … 80 per cent of them are made in the U.S., and then some of the location shooting is done in another country? Or what about all the production is done in the U.S. but then some of the post-production is done in another country? Are those also going to be subject to 100 per cent?'
Article content
That was echoed by Noah Segal, co-president of Canadian production and distribution company Elevation Pictures. He noted that Dune 2 was an American studio production with a Canadian auteur (Denis Villeneuve) at the helm, and worldwide shoots including Hungary, Jordan and Italy.
Article content
'The game has always been ownership of (intellectual property),' Segal said. 'So I'm not sure what he (Trump) is afraid of. If the Americans own the majority of content, they win, no matter if it's shot in Germany, Latvia or the moon. It doesn't matter.'
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Let's not panic about Taiwan yet
Let's not panic about Taiwan yet

Winnipeg Free Press

time44 minutes ago

  • Winnipeg Free Press

Let's not panic about Taiwan yet

Opinion 'I hope I am wrong. My gut tells me we (the U.S. and China) will fight in 2025,' wrote General Mike Minihan, head of U.S. Air Mobility Command, in a private memo two years ago. There's still five months to go, but I'm going to go out on a limb and say that he's wrong. Don't take my word for it, because my recent record in these matters is bad. I didn't think Russia's Vladimir Putin was crazy enough to invade Ukraine although I knew he was largely detached from reality, and I was wrong. For a long time I would not use the word 'genocide' to describe what Israel's Benjamin Netanyahu was doing in Gaza, and I was wrong again. In my defence, I had not spent quality time with either man and I was reluctant to predict their actions based entirely on other people's estimates of their characters (especially since most of those people didn't know them personally either). I still felt compelled to weigh the pros and cons of the case, on the mistaken assumption that facts had some influence on their decisions. The possibility of a Chinese invasion of Taiwan is a far greater threat to the peace of the world (such as it is) than the relative sideshows in Ukraine and Israel/Palestine. Aircraft carriers and nuclear weapons on both sides. A few poorly planned displays of 'determination,' and the U.S. is in a war with China — with the two Koreas and Japan not far behind. China's President Xi Jinping will never rule out using force to 'recover' Taiwan, but the story that he has set a 2027 deadline for that terrifying gamble is just a Washington think-tank special. He does harp about it a lot, though. Successive American administrations have practised 'strategic ambiguity' (i.e. maybe the U.S. would fight to defend Taiwan and maybe it wouldn't), and the fickle enthusiasms of Donald Trump muddy the waters even further. He is widely seen as a strategic coward (TACO), but he is sufficiently erratic that his response is really incalculable. As for Taiwan, President Lai Ching-te of the cautiously pro-independence Democratic Progressive Party (DPP) serves up the usual word salad: 'The message of history is clear. Today we share the same values and face similar challenges as many of the democracies that participated in the European war (1939-45).' Evasiveness as policy, so as not to rile China. So I will risk my reputation as a soothsayer once again and assume that both Xi Jinping and Lai Ching-te are rational men. In that case, it is unlikely that either man will risk everything on one roll of the dice. Xi will not set the machinery in motion for a sea- and airborne invasion of Taiwan, and Lai will certainly not declare independence for Taiwan. No government of Taiwan, even back in the decades when the KMT (now reformed) was the tyrannical and maniacally anti-communist single ruling party, has ever seriously considered abandoning the sacred fiction that there is only one China including Taiwan. There is just a persistent non-violent dispute over which government is legitimate, Beijing or Taipei. As for Xi, who is effectively president-for-life, he faces no special deadline to claim his prize. 'Reunification' is his legacy project, but he has just turned 72 and there's lots of time yet. And always before him is the nightmare example of Putin's three-day 'special military operation' to bring Ukraine back under the rule of the Russian 'motherland.' Above all, there is Taiwan's 'silicon shield.' The island state manufactures 47 per cent of the world's advanced semiconductor chips, including all of the most advanced ones. Even the United States is one generation behind, and so is China despite its 'Deep Seek' triumph in producing much cheaper high-performance AIs (on Nvidia chips made in Taiwan). Invade Taiwan and all that is gone. It might be irrational, but even the Trump administration might feel that Taiwan is a treasure that it must defend come what may. The game is not worth the candle, and Xi will not invade for at least three years. He probably never will. There! I said it! Now we wait and see. Gwynne Dyer's new book is Intervention Earth: Life-Saving Ideas from the World's Climate Engineers.

Warpath to profitability?
Warpath to profitability?

Winnipeg Free Press

time44 minutes ago

  • Winnipeg Free Press

Warpath to profitability?

Opinion The defence industry is often overlooked by investors. It's perceived as boring compared with technology or worse, it's just an unethical way to put profit in the portfolio. Since the February 2022 invasion of Ukraine by Russia, however, the defence industry has drawn significant investor interest. Notably, the perception has changed. That includes some of those who might have felt investing in defence was distasteful; they now see it as a needed buttress against rising authoritarianism. Of course, another shift is financial — based on the forecast injection of hundreds of billions of dollars in additional spending by NATO members. Pexels NATO members (including Canada) are forecast to invest hundreds of billions of dollars in additional annual spending in defence in the years to come. Canada alone is expected to increase military spending about $70 billion annually to meet its most recent defence commitment of five per cent of gross domestic product. The big question for many intrigued investors is whether they've already missed the warship. 'Our view is that type of information gets incorporated into market prices really quickly,' says Ben Felix, chief investment officer with PWL Capital in Ottawa. 'The implication of that is by the time you read about it in a Free Press article, any advantage that you may have got by investing in that theme is already gone.' That said, the defence industry landscape and recent performance are still of interest to inquisitive investors who might consider putting their money to work when prices pull back periodically. For the time being, however, many defence company share prices have hit lofty heights, including a handful of Canadian firms such as satellite technology company MDA Space Ltd. Its share price is up more than 50 per cent year to date. As well, aerospace company Bombardier's share price 'has almost doubled in recent months, so obviously, all of the talk that has been going on is certainly helping,' says Brian Donovan, New Brunswick-based president of provider of valuation models for investors. 'It tells you that there is an interest shift into this space.' StockCalc tracks performance of thousands of North American equities, including about eight Canadian firms with defence industry revenues. One even has a footprint in Winnipeg: Magellan Aerospace Corp., which makes components for military aircraft. Its share price is up more than 80 per cent YTD. If those gains sound lofty, consider some firms listed in the United States and Europe. Notably, artificial intelligence firm Palantir is up 106 per cent this year. Even more impressive, its share price is up nearly 1,600 per cent over the last five years. A key driver is its defence contracts with the U.S. and partnerships with other technology and manufacturing companies involved in defence. That includes L3 Harris Technology, which, like Palantir, operates in many industries. Its drone technology business is a big defence revenue driver. (That said, its share price growth YTD is much less than other defence stocks.) In Europe, the most notable defence growth story is manufacturing conglomerate Rheinmetall AG. Among the many defence technologies it manufactures are Challenger and Leopard tanks. Its share price is up about 200 per cent YTD, and more than 2,000 per cent in the last five years. The big driver is Germany planning to spend more than a trillion dollars on defence in the next five years. That investors are now turning onto the defence sector is understandable (given the headlines) and somewhat ironic at the same time because it has not been a lacklustre industry for long-term performance. Publicly traded companies involved in the U.S. defence industry have collectively provided returns on an annual basis that have outpaced the S&P 500, says Scott Sacknoff, manager of the SPADE Defense Index in Washington, D.C. 'There is a long history of defence outperforming.' And it very well could continue to outperform, given the U.S. defence budget is expected to surpass US$1 trillion annually for the first time in history, he adds. If anyone has deep knowledge of the defence sector, it's Sacknoff. The SPADE Index, which he manages, consists of leading U.S.-based defence companies and has outperformed the S&P 500 by roughly more than 1,000 basis points (or 100 percentage points) over the last 25 years. Yet until Russian President Vladimir Putin decided to invade Ukraine in 2022, defence was a profitable but sleepy market corner. The explosion in defence spending has changed that, leading to greater investment and even a rush of new investment products, notably exchange-traded funds (ETFs). Prior to 2022, investors largely had three ETFs to choose from, including one of the longest running: Invesco Aerospace & Defense ETF. For investors looking for exposure, the Invesco product is worth a look. Since launching in 2005, it has had steady growth. Investment data firm Morningstar data shows US$10,000 invested in 2005 would be worth nearly US$120,000 today. In turn, the ETF has Morningstar's highest rating. Sacknoff notes the ETF's performance is driven by the underlying SPADE index, which uses a modified market cap weighting to address the downsides of passive investing that lead to over-concentration in overvalued stocks. 'In simplest terms, this involves ensuring that large companies aren't too large, and small companies aren't too small.' He adds the index's annualized return over 15 years is 17 per cent. 'You have never lost money in any product tracking our index if you invested and held onto it for at least three years.' Yet one might ask, would that still hold true today? 'The big question is whether earnings and revenues will catch up to the high valuations,' Sacknoff says. Only time will tell. Yet not all companies on the index are surging in price, including Lockheed Martin, manufacturer of the F-35 fighter that Canada and other NATO countries have contracts to buy. Its share price is actually down slightly this year. Wednesdays A weekly dispatch from the head of the Free Press newsroom. What's more, U.S. President Donald Trump's scattershot economic policy is likely to lead to downside market volatility, presenting buying opportunities for defence companies. Yet their long-term tailwind is likely not going away soon. For the time being, however, this high-flying sector seems more of a minefield than a warpath to profitability. Joel Schlesinger is a Winnipeg-based freelance journalist joelschles@

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store