Missing Hollywood for the trees

Donald Trump has now threatened to tax Hollywood films shot abroad - principally in Britain, Australia, New Zealand and Canada - to escape higher production costs at home. This runs into difficulties over how a movie is to be labelled 'American' - by plot, cast and crew, or studio?

Hollywood is the world's fourth-largest producer of films, trailing India, Japan and China. But this comparison is irrelevant when it comes to box-office collections, which it dominates overwhelmingly. The average production budget for a Hollywood film is over 10 times that of a European movie. Hollywood blockbusters are typically characterised by FX, star power and marketing muscle - all of which drive up costs.

These remain uniquely American traits that drive value in the global movie industry. Moreover, Hollywood films are released globally on distribution channels controlled by giant US media companies, which could face backlash in the event of a trade war.


Hollywood films are the most transnational in their oeuvre. Imposing limits on location curtails their creative freedom. Audiences are more demanding in terms of authentic characterisation and locales. A Harry Potter movie cannot be made without British accents or its countryside - both hard to replicate in California.

The nature of US engagement with the world also defines its movie industry: a steady stream of wartime footage is required from Basra, Mosul and Kandahar - or from less-dangerous locations dressed up to look like them.

Separating genuine cinematic requirement from subsidy-induced outsourcing by Hollywood studios is going to be tricky - and self-damaging. Hollywood, like Silicon Valley, should have the business freedom to outsource labour-intensive FX to countries like India that can do it for much less. (India sent a mission to Mars for less than it costs to make a Hollywood movie about the subject.)

Trump needs to think about the stories that make America great. And they're not all American.