Trump’s Movie Tariff Impact: Netflix Could Face $3 Billion in Additional Costs and 20% Hit to Earnings, Analyst Predicts

Despite initial beliefs that Netflix would be a safe haven from tariff-related economic uncertainty, one analyst is warning that it may no longer be true as President Trump has announced a new 100% tariff aimed at movies produced outside the United States.

Citigroup analyst Jason Bazinet estimates that the streamer could potentially incur a 20% hit to earnings per share and $3 billion increase in costs annually under a “worst-case scenario,” though he anticipates that the likely impact will be “far smaller.”

The bank estimates that Netflix spends around $17 billion on content each year, comprised of about 40% licensed and 60% produced content, with 50% of the latter created outside of the U.S. Based on this, earnings per share could be reduced by 20%, or 6 cents per share, due to a 100% tariff on movies.

Bazinet noted that Netflix could limit the impact by not “importing” content produced outside the U.S., which would reduce the hours of content available to U.S. consumers, or simply produce more content in America.

“We suspect the savings from producing shows outside the U.S. are far lower than the proposed 100% tariff,” Bazinet said. “For example, if it costs 35% more to produce content in the U.S., the impact should be one-third of the level we estimated, or only ~$2 per share.”

Another option would be to raise prices in the U.S. in line with higher production costs.

“If we assume U.S. production costs are 35% higher than non-U.S. costs, it’s akin to a $1 billion increase in annual costs,” Bazinet added. “If this cost is borne by U.S. consumers, it would cause [average revenue per user in the U.S. and Canada] to rise about 7%.”

While Bazinet predicted the worst-case scenario, other analysts are awaiting more specifics from the Trump administration, with questions including who would pay the tariff and how it would be calculated to whether this would also impact TV productions and if film productions that currently or have already wrapped filming will be grandfathered in.

In addition to Netflix, Morgan Stanley analyst Benjamin Swinburne said that Disney, Lionsgate, Cinemark, Warner Bros. Discovery, Comcast and Paramount would all be negatively impacted by the potential tariff, as would Fox, Roku and AMC Networks. Ad agencies and other out of home (OOH) businesses would also face a negative indirect impact.

Barclays analyst Kannan Venkateshwar noted that the U.S. exports three times the amount of content that it imports and generates $15 billion in trade surplus.

Given the limited information, he expects studios are likely to react by freezing activity pending clarity and that production volume may fall in the immediate term. Venkateshwar estimates that Netflix has ~70% of international titles available in the U.S. and over 50% for non-U.S. content spend, while Amazon Prime Video has ~55% of international titles.

Swinburne warned that the biggest risk would be foreign governments blocking the export of U.S. content through theatrical, streaming or both, which would raise the potential for streamers to be taxed at materially higher rates or reduce Hollywood content’s reach.

“This in effect would result in U.S. companies being tariffed/taxed both by
the U.S. and by other countries. Countries like France and a few others in Europe already tax Netflix on local revenues, and this practice could spread wider as a form of retaliation,” Venkateshwar added. “One caveat is that countries like France require global streamers to invest a certain amount of their local revenues into local film and TV production.”

Though media stocks initially dropped from the news during Monday’s trading session, they have since reversed some of their losses after Trump said that “no final decisions” have been made on the movie tariffs. A spokesperson for the Trump administration told TheWrap they are “exploring all options to deliver on President Trump’s directive to safeguard our country’s national and economic security while Making Hollywood Great Again.”

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