Trump’s Film Tariffs: Can the US Really Tax Bollywood, and What Does It Mean for India’s Entertainment Industry

On 29 September 2025, US President Donald Trump announced a 100% tariff on all films produced outside the United States. He claimed that foreign-made films were undermining the US movie industry, stating, “Our movie-making business has been stolen from the United States of America, by other countries, just like stealing candy from a baby.”

This move is unprecedented, as it extends US tariffs to digitally delivered services like films. The policy could have a significant impact on India’s film industry, which has a substantial presence in the US market.

What Tariff Means For the Indian Entertainment Industry

A 100% tariff has the following impact on the Indian film industry:

• Revenue Loss

The United States contributes between 40% and 60% of Bollywood’s overseas box office collections, making it the single largest foreign market for Indian films. For instance, the Hindi blockbuster Saiyaara earned over $6 million (₹53 crore) in North America alone in 2025, ranking as the third-highest Indian film in the region.

With Trump’s 100% tariff, ticket prices are projected to rise from $10–12 to $18–20 per seat, effectively doubling the cost for audiences. This sharp increase is expected to deter diaspora families from attending theatrical releases, especially mid-budget films. Trade analysts estimate that this could wipe out nearly 40% of US revenues for Indian cinema.

• Regional Movies

Telugu cinema (Tollywood) has a deeper footprint in the US than Hindi films. It accounts for nearly 60% of Indian theatrical releases in North America. Films like Pushpa 2, RRR, and Kalki 2898 AD have outperformed Bollywood counterparts in diaspora markets. A 100% tariff would disproportionately affect Telugu producers, who rely on US collections for 10–15% of total revenue.

• Digital Streaming

While theatrical releases are directly impacted, there is ambiguity surrounding whether tariffs will also apply to digital platforms. Indian films licensed to US-based OTT services generate substantial revenue through subscription and pay-per-view models. If tariffs extend to digital rights, licensing costs may rise, reducing the number of Indian titles acquired. This could shrink exposure for regional films and reduce monetisation opportunities. As of September 2025, no clarification has been issued on whether streaming platforms are included in the tariff scope.

• VFX Outsourcing

India’s animation and VFX (visual effects) sector makes a significant contribution to Hollywood and global productions, with over 85% of post-production work for foreign films being executed in India. The tariff’s broad language raises concerns about whether outsourced services will be taxed if they’re part of a film “made outside the US.” If so, this could disrupt India’s $1.3 billion VFX export pipeline. Studios may relocate work to tariff-exempt jurisdictions, undermining India’s competitive advantage in cost and talent.

• Budget Recalibration

Indian producers are now compelled to reassess their budgets and distribution models. With the US market under threat, films that previously allocated 10–15% of their budget for overseas marketing may slash that to under 5%. Distributors are exploring alternative markets such as Canada, the United Arab Emirates (UAE), and Australia, where Indian films have seen steady growth.

For example, Pathaan earned $18 million in the US but also grossed $12 million in the UAE and $9 million in Australia. Producers may now prioritise these regions, reallocating promotional budgets accordingly. Additionally, marketing strategies are shifting toward digital-first campaigns, reducing reliance on theatrical trailers and in-person promotions in the US.

• Domestic Industry Realignment

Some Indian filmmakers view the tariff as a potential opportunity for the domestic cinema industry. If reciprocal tariffs are imposed on US films entering India, ticket prices for Hollywood blockbusters could rise, redirecting audiences to local productions.

Filmmaker Anurag Basu described this as “box-office karma,” suggesting that domestic films may benefit from reduced competition. In 2024, Hollywood films accounted for 15–18% of India’s urban multiplex revenue. A tariff-induced decline could allow regional and indie films to reclaim screen space.

However, this benefit hinges on India’s policy response and whether reciprocal tariffs are enacted. Without such measures, the domestic boost may remain speculative.

Enforcement Challenges and Diplomatic Fallout

The legal basis for taxing digital content like films remains unclear. Unlike physical goods, movies are software-based and often produced across borders. Trump’s announcement did not specify whether tariffs apply to pre-production, post-production, or distribution phases. This ambiguity complicates enforcement and raises questions about World Trade Organization (WTO) compliance.

If the tariff targets only theatrical releases, streaming platforms may escape scrutiny. However, if applied broadly, it could trigger reciprocal measures from other countries, affecting Hollywood’s global earnings, 60% of which come from overseas markets.

India’s trade negotiators are reportedly seeking clarity on whether the tariff applies to Indian films released in the US or to US films produced abroad.

Conclusion

A proposed 100% US tariff on foreign films poses a significant threat to Indian cinema. Bollywood and Telugu releases are likely to be the most affected. Publicly listed companies such as PVR INOX, Zee Entertainment, and Eros International could see margin pressure as overseas licensing revenue declines and theatrical footfalls drop.

For traders, it will be good to closely watch Q3 earnings guidance, the extent of US box office exposure, and potential renegotiations of OTT deals. Investors may need to reconsider media sector allocations, favouring domestic-focused content producers and broadcasters with diversified portfolios.

Short-term volatility in entertainment stocks is expected, with hedging strategies via options or shifting allocations to FMCG and banking offering potential stability. Ultimately, regulatory clarity and the timeline of US implementation will be crucial in assessing the long-term impact.

Sources

Times Now
NDTV
Indiatimes
Hindustan Times