Trump film tariff plan could open door for Puerto Rico
President Donald Trump’s proposal to impose a 100% tariff on movies made outside the United States has raised questions about how it would work, and could open an opportunity for Puerto Rico’s film sector, which already offers significant tax incentives.
In a post on Truth Social this week, Trump said he would apply the tariff to “any and all movies that are made outside of the United States.” He has not specified when it might take effect or how it would be enforced. He has previously used national security to justify tariffs on sectors including heavy trucks, certain branded drugs and kitchen cabinets.
It remains unclear how a tariff would function in the film industry, where production and distribution are largely digital. “Traditional tariffs apply to physical imports crossing borders, but film production primarily involves digital services,” Ann Koppuzha, a business law lecturer at Santa Clara University, told the Associated Press, calling the proposal “uncharted territory.”
Barry Appleton of the New York Law Center told the AP that foreign governments could retaliate with restrictions on American productions. Heeyon Kim, a professor at Cornell University, noted that international markets accounted for more than 70% of Hollywood’s box office sales last year, so sweeping tariffs could cut into revenue and threaten jobs.
Puerto Rico has sought to position itself as a competitive option for film production within U.S. jurisdiction. Cast & Crew, which tracks incentives worldwide, highlights that the island offers a 40% tax credit on qualified local spending and resident labor, plus 20% on some nonresident costs.
The program, managed by the Department of Economic Development and Commerce (DDEC, in Spanish) and the Puerto Rico Film Commission, requires a minimum spend of $50,000 and certification by a Puerto Rico CPA, while excluding certain nonresident payments. The program is capped at $50 million annually for credits to residents, with possibilities for expansion under certain circumstances.
According to the Motion Picture Association, the film and television industry in Puerto Rico supports more than 4,100 jobs and generates about $157 million in wages. A 2021 study by Estudios Técnicos found that nearly 100 film projects produced between fiscal years 2016 and 2019 contributed roughly $424 million to the island’s economy.
In 2023, then-Gov. Pedro Pierluisi signed a law to raise the annual credit cap to $100 million to compete with Canada and the United Kingdom, allocating $74 million in American Rescue Plan Act funds to support the program. The federally created Financial Oversight and Management Board has put that increase on hold.
At the time of publishing, the DDEC had not responded to a request for comment on the potential impact of Trump’s tariff proposal.
Law and accounting firms emphasize Puerto Rico’s advantage as part of U.S. territory. In a March advisory, Grant Thornton noted that the island’s incentives under Act 60 stand out because they are available within U.S. jurisdiction, unlike those in foreign markets.
Uncertainty remains over how Trump’s proposed tariff would be applied. “When you make these sort of blanket rules, you’re missing some of the nuance of how production works,” Steven Schiffman, a producer and adjunct professor at Georgetown University, told the AP.
