Earlier this week, the US President Donald Trump posted on his social media site that he plans to impose a 100 per cent tariff on films produced outside the United States.
“The US film industry is dying at a rapid pace. Other countries are offering all sorts of incentives to lure filmmakers and studios away from the U.S. (…) Therefore, I am authorising the Department of Commerce to immediately begin the process of imposing a 100 per cent tariff on all foreign-made films coming into our country,” Donald Trump said in his post.
Back in 2010, soon after becoming Hungarian prime minister, Viktor Orbán overhauled the film support system after 2010, with Hollywood producer Andy Vajna (Rambo, Total Recall, Evita) at the centre of the reforms.
Andy Vajna’s legacy
Vajna set up a new system of state support for Hungarian films, with a greater emphasis on saleability. He also used his connections to bring Hungarian artists into the fold, resulting in a new Hungarian Oscar after decades and a good showing for Hungarian films at the Cannes Film Festival.
The Hungarian state gave a corporate tax credit of 25 per cent and then 30 per cent on production costs in Hungary, with the aim of benefiting the domestic production base. Several large studios were set up, professional crews strengthened, and income from foreign labour increased.
Vajna’s death in 2019 has left a noticeable dent in the support system for Hungarian films, which has recorded fewer international successes. Still, the growth of Hungarian production companies has not slowed. Between 2018 and 2023, service revenues quadrupled, with government film commissioner Csaba Káel estimating they will reach nearly $1 billion.
Around 85-90 per cent of Hungarian film spending is US-sourced, writes Károly Radnai, managing partner of Andersen Adótanácsadó Zrt.
Wait for the end
Despite accounting for 90% of the revenues of the Hungarian film industry, which employs 20,000 people and is also identified by Prime Minister Orbán as a strategic sector, film industry players reached by Euronews are taking a wait-and-see stance.
“The intention to make more films in the United States and export fewer films overseas is not something that has just been invented, but has been heard louder and louder for 4-5 years,” Mihály Tóth, marketing director of Origo Flmstúdió, told Euronews. The current situation is an exclamation mark: we understand that there is such a need. We also want more films to be shot in Hungary. “
“The decision to shoot American films in Hungary was not made by us, but by American filmmakers, on the simple basis of where a film can be produced most efficiently. Nobody understands the kind of customs clearance system that is now being suggested, because you can’t tax a cultural product in this way,” added Mihály Tóth.
He also had questions for Gergő Balika, producer of Mid Atlantic Films, who told Euronews that he did not know the basis for the duty. What qualifies as a foreign-made film? Would the duty apply only to cinema films, or would it also apply to works made for streaming?
Balika also stressed that even a film shot in Hungary has a myriad of work processes in the US. Overall, he said that this is now a tentative announcement, which shows the direction of US intentions, but details are still to be seen.
Lead time of several years
The problem is also theoretical at the moment because making a film is a long process.
According to Mihály Tóth, Origo’s clients are undoubtful, and that the work in progress must continue. How the rules will change along the way and the timing of these changes remain to be seen, but work has to continue in the meantime.
“Today’s rain will affect the filming outside more than this announcement,” Mihály Tóth told Euronews. Like him, Gergő Balika also sees it as unlikely that production of big productions that are already booked (such as the next two seasons of the 3-body-problem) will be brought back to the US.
However, several sources have pointed out that the global film industry cannot be pinned down. A Mission: Impossible or a James Bond movie is not shot in one country, and that will not change.
“For example, filming a Harry Potter movie requires a medieval castle. It costs more money to build that than to go to a castle and shoot a scene there. To suddenly have medieval castles in a country where there are none, you can’t expect that, because economically it doesn’t go anywhere,” said Mihály Tóth.
Csaba Káel, the head of the Hungarian National Film Institute, the central organisation of the Hungarian film industry, expressed a similar view in a one-paragraph statement.
“Hungarian film studios are currently full of international and domestic productions. Working out the details of possible US safeguard tariffs affecting the domestic film industry and their introduction is a longer process. In the meantime, we are discussing further cooperation and co-production opportunities with our foreign partners on several continents around the world that will benefit the Hungarian film industry.”
Hungary is not the primary target
The fluidity of the issue is reflected by the fact that President Trump later promised to hold talks with representatives of the US film industry, and the White House said that no final decision on tariffs for films made abroad has yet been made.
Responding to questions from journalists, Trump stressed that film production and the relocation of filming abroad had “decimated” the US film industry and that he wanted to help, not harm, the industry, which receives financial and other support abroad.
“We are watching the international news. What I was really looking forward to was the reaction from the United States, and the governor of California said that California has a successful support model, so why don’t they take it to the federal level? This kind of reaction is a good message, structural problems should be addressed locally,” said Mihály Tóth. However, Gergő Balika thinks the US government may eventually pressure studios to keep more of their film production work at home.
According to Károly Radnai, managing partner of Andersen Adótanácsadó Zrt, the real target may not be Hungary, but Canada, the UK and Australia. As it is a service, the problem cannot be dealt with by classical customs measures, which means that Hungary can negotiate with the US independently of the EU for facilitations or exemptions.
“It would be important,” Radnai writes, “for the Hungarian government to act as soon as possible and use the good relations with the Trump administration to assert our country’s interests diplomatically.”
