The entertainment industry woke up on Thursday to the reality that its turn of the economic corner is more elusive than ever. President Donald Trump’s reciprocal tariffs against 180 countries sent global markets reeling, with U.S. stocks seeing their biggest one-day plunge since 2020 and unleashing dire predictions for the economy, including a looming recession.
For Hollywood, which has been trying to right itself since the pandemic, the actors and writers’ strikes and more recently the wildfires, it was one more plunge into the unknown.
Intellectual property like films and TV shows will not be directly subjected to tariffs as a “service,” which instead hit consumer goods including cars, iPhones, clothing, wine, coffee and chocolate. But make no mistake, that doesn’t mean the entertainment industry escapes a world of hurt as movie and television production, live entertainment and theater upgrades will likely take a hit.
“These tariffs are just going to underline and highlight the already vulnerable parts of our entertainment industry,” veteran producer Tom Nunan, the former president of NBC Studios and founder of Bull’s Eye Entertainment, told TheWrap. “They’re just going to expedite some of the more troubling developments that we’ve all feared since COVID, since the strikes.”
Trump’s moves come as Hollywood faces continued contraction and a lack of work in Los Angeles, as productions continue to shift elsewhere for tax breaks — including Canada and the U.K.
“The question will become whether this is going to [accelerate] these other events that seem to be on the horizon, which is more consolidation and possibly just certain companies just hanging up the towel when it comes to some of the legacy businesses like linear networks and ad-supported cable networks,” Nunan added.
Indeed, look no further than what the tariffs mean for advertisers, a main artery that sustains media and entertainment.
A recent survey conducted by Interactive Advertising Bureau (IAB) shows that of 100 advertising decision-makers, 94% of them are concerned about the impact of tariffs on ad spending. Of those, 57% are “extremely concerned” and 37% are “somewhat concerned.”
If that’s not chilling enough, look at these numbers. The IAB says most advertisers anticipate these declines in 2025 ad budgets due to “tariff-related pressures”:
- More than 20% decrease – 4%
- 0-5% decrease – 14%
- 6-10% decrease – 60%
- 11-20% decrease – 22%
Here are the sectors of media where that becomes a reality:
Of course, the tariff hammer comes down as TV networks are preparing for their annual upfronts, where they will pitch to advertisers starting this month.
Brian Wieser, CEO of Madison & Wall, which analyzes advertising, said of the current mood on Madison Avenue: “There’s a proper understanding of the chaos that the current administration intends to bring. So you can kind of play out how everyone will be feeling in a couple months and it won’t be good. It will be even worse than it is right now.”
Struggling on a budget
Consumers have not felt much relief from grocery bills and other higher costs of living during these first months of the Trump administration. They also have fears about Social Security, health care and retirement funds, if they have any. These are the folks who buy movie tickets, streaming subscriptions and all the other products the industry sells to them — T-shirts, video games, theme park tickets, etc.
During past cataclysmic downturns, these consumers leaned into movies and TV as “escapism,” but 2025 is a different world, and Hollywood is more aware how many Americans these days live paycheck to paycheck — many believe the price of eggs helped sway the election.
Earlier this year, consulting giant McKinsey reported that three-quarters of consumers across the board were planning to “trade down” in the first quarter this year, more so among Gen Z and Gen Xers. Not great news for the studios and TV networks and streamers.
“It’s going to impact subscriptions and box office first,” producer Nunan said, “because that’s disposable income and people are going to be hit right away.”
At CinemaCon in Las Vegas on Thursday, the conversation among movie theater executives amid the tariff news was primarily focused on industry issues like ticket pricing, theatrical windowing and updating theaters with infrastructure investments.
It couldn’t come at a worse time for the box office — domestic totals for the first quarter are set to finish at approximately $1.4 billion, down around 12% from last year’s $1.6 billion and 19% from the $1.72 billion of 2023.
While trade organization Cinema United has proudly touted the $2.2 billion pledged by various theater chains to refurbish their multiplexes, that money is likely to not go as far. Theaters that need to upgrade sound and picture in particular may have to recalibrate their plans, as digital cinema projectors are entirely manufactured outside of the U.S.
Hollywood productions will face new scrutiny. Noted Nunan: “Suddenly Netflix or Disney will take a second look and say, ‘Can we really afford our production plans that we had projected for 2026, 2027 and 2028?’ We can all agree we’re going into a recession. The question is are we going into a depression? And if that’s the case, what are these big studios, what are these big media companies going to do?”
And at a time when moviegoers are far more selective about what films they buy movie tickets for, turnout from audiences may become more infrequent if overall entertainment spending scales back.
“We have as an industry emphasized for years that moviegoing is the most affordable form of a night out,” an industry consultant who asked to remain anonymous told TheWrap. “We’re now going to have to fight even harder to convey that message because so many no longer see it that way.”
Beyond movies, Morningstar senior equity analyst Matthew Dolgin in a Thursday research note said Disney and Live Nation were particularly vulnerable to a pullback on consumer spending in theme parks and live entertainment.
“Disney’s parks and experiences generate most of its profit,” Dolgin wrote. “A recession would likely depress tourism and reduce attendance at Disney’s parks. Apart from economic weakness, Disney is at risk of less international tourism to the U.S,. particularly from Canada, due to chilled foreign relations.”
And concert promoter Live Nation is also at risk “as concert attendance is a luxury that consumers could pull back from if needed,” Dolgin added.
Disney CEO Bob Iger reportedly attended an ABC News editorial meeting on Thursday and outlined how the tariffs could impact the company in indirect ways. According to Oliver Darcy, Iger cited the example that rising steel prices could drive up the costs for two new Disney cruise ships under construction, and warned against a notion that companies could just pick up and move manufacturing overnight. His presence and straight talk was a reminder how deep the worry is penetrating the media C-suite.
Plywood tells the story
The tariff wallop will reach from the broadest impact of theme park tickets to the most specific of products, such as lumber, which is massively used on sets. Production crews use millions of tons of lumber each year to construct sound and production stages. Canada is the number one importer of lumber to the U.S. and faces tariffs of 40% or higher under Trump’s plan.
Most common among the materials are so-called Hollywood flats, which are built with a wooden frame, typically using 3’x1′ timber on as the edge, and then covered with a plywood skin. Even before tariffs, the price of a sheet of plywood doubled in a year to $80.
At the top end, a major movie set can cost tens of millions of dollars, and as little as tens of thousands of dollars for commercial sets.
Mike Orth, senior project manager and product designer with North Hollywood’s 41 Sets, which does as many as 100 set projects a year, said the company will just have to bake the tariffs into “the cost of doing business.” He said he estimates the cost for all materials for sets, not just lumber, like plastic and metals, could go higher by 30% under Trump’s tariffs. “What’s concerning is if and when [studios] stop projects because of costs.”
Orth isn’t kidding himself either about how this will trickle down to his labor costs for his five full-timers and 20 or so workers he hires in addition by project. “Their costs and their families’ costs are going to spike under tariffs across the board. It’s going to cost them more just to live.”
The economist with the last word
For Kevin Klowden, an economist and executive director of the Milken Finance Institute, the tariffs are not the problem for Hollywood but place a heavy thumb down on all its other issues that have been plaguing the industry the last few years.
“As far as I’m concerned, the tariffs’ impact for Hollywood are not nearly as significant an issue as several of the others, namely the strong dollar, the overall cost of filming in the U.S., not just California, between labor costs, between the overall production costs, everything [for why] productions have been consistently moving overseas because they’re cheaper.
“The combination of the incentive packages in places like the U.K. and Australia and Canada, lower labor and materials costs, and everything else — the tariff will just serve to exacerbate that. The ‘tariffs,’ if you will, that are most significant in many ways already happened.”
Jeremy Fuster contributed to this report.
