U.S. President Donald Trump's proposed 100% tariff on foreign-made films has returned. First announced in May, then quietly shelved, the threat resurfaced this fall with Trump claiming other countries are "stealing candy from a baby" in the form of Hollywood. When Trump first floated this idea, entertainment stocks dropped roughly 5%. In September, however, the markets barely flinched. Wall Street has learned what Japan and other Asian soft-power nations should remember: Trump's tariff threats are theater, not policy.
The proposal's rationale is weak. Trump wants to place a tariff on movies -- services and intellectual property, not goods -- to protect an industry that already provides the U.S. a $15.3 billion trade surplus. He's attacking one of America's export successes to "save" it,
ignoring the soft-power benefits entertainment provides globally. Additionally, global cinema box office spending represent about 1% of the global entertainment and media industry's revenue, according to a PwC Outlook report. The real money is in streaming, gaming, merchandising and licensing -- areas where defining "foreign-made" becomes impossibly complex.
Trump has already placed tariffs on Chinese imports, including film merchandise -- toys and character goods that often generate more revenue than box office receipts. In Japan's case, anime merchandise value is around three to four times that of streaming, according to AJA and Parrot Analytics. American children now pay more for Pokemon cards as well as Superman action figures, therefore both domestic and foreign intellectual property merchandise has grown more expensive. Adding tariffs on films attacks both ends of the IP value chain while addressing none of its actual challenges.
The American film industry's real problem isn't foreign theft, it's economics. Production costs have soared as American studios chase tax incentives overseas. Approximately 18,000 production jobs left the U.S. in a large part because Los Angeles soundstages cost 30% to 50% more than facilities in Toronto, London or Budapest.
Trump's threat may inadvertently accelerate Hollywood's pivot toward animation and AI-generated content. Studios have been moving in this direction for years: Animated films and CGI blockbusters dominate box office charts. Japanese anime demonstrates this evolution's endgame -- entertainment that happens anywhere, with digital output crossing borders seamlessly, making the term "foreign-made" impossible to define.
Even the characters reflect this -- racially and culturally ambiguous by design, they belong to no specific ethnicity, allowing global audiences to see themselves in the stories regardless of their Japanese origin.
Japanese anime generates billions globally with minimal physical production. "Attack on Titan" had a $10 million budget for five seasons versus "Game of Thrones" at $10 million per episode. In 2025, "Demon Slayer: Infinity Castle" became the sixth top grossing film globally on a $20 million budget -- essentially the fee of either Jack Black or Jason Momoa alone for their performances in "Minecraft: The Movie."
What makes Trump's threat truly absurd is that entertainment is America's most durable form of global influence. Soft power outlasts military might. Hollywood has done more to spread American values than any aircraft carrier. As reported by Anime News Network, at the sold-out world premiere of "Tatsuki Fujimoto 17-26" in Los Angeles, director Nobuyuki Takeuchi remarked on his joy at being at the Chinese Theatre due to his love of the American made TV detective series "Columbo," a remainder that cultural influence flows both ways.
Two irreversible trends are dismantling Hollywood's monopoly: Internet democratization has ended distribution gatekeeping, with global audiences accessing South Korean dramas, Japanese anime and Bollywood films directly through streaming. Meanwhile, demographic shifts create demand for diverse stories rather than perpetual secondary roles in American narratives.
The evidence is all arounds us: Korean content tops Netflix's global charts. BTS and Blackpink sell out American stadiums. Film tourism has helped to increase Japan's inbound traffic to record highs. Korean and Japanese have become popular languages among American teenagers. "Parasite" winning the Best Picture Oscar in 2020 shows the global acceptance of Asian storytelling but is only part of the longer narrative.
By weaponizing entertainment through tariffs, Trump is accelerating American cultural decline, even as Asian content creators fill the vacuum. The soft-power crown is up for grabs, and Japan and South Korea are well positioned to seize it.
The correct response is something Asian Entertainers are well positioned to seize: wait and keep the following three things in mind.
First, Trump's pattern. He repeatedly announces maximalist tariffs, only to walk them back. "Exploring all options" is Washington-speak for indefinite delay. Trump's attention span is measured in news cycles; other countries, such as Japan, have a strategic horizon of decades.
Second, implementation is impossible. How do you define "foreign-made" when blockbusters shoot in Los Angeles, do postproduction in London and visual effects in Vancouver? Is Sony Pictures an American or a Japanese company? The regulatory gymnastics exceed Trump's administrative capacity.
Third, market indifference creates opportunity. Trump's May announcement lowered entertainment stocks by 5%, September's barely registered. This credibility collapse gives other countries strategic space. While Hollywood is paralyzed by uncertainty, Japanese, South Korean, or even newcomers from Taiwan or Thailand can move boldly, negotiating better streaming deals, securing talent, investing in capacity.
Japan excels at strategic patience. From auto negotiations to semiconductor conflicts, Japan has waited out American trade theatrics while quietly strengthening its position. But waiting doesn't mean being passive -- in the meantime, the country can accelerate the development of AI animation technology.
Trump's film tariff will likely join his long list of abandoned threats. Japan should wait out this storm while preparing for the next administration, or at least a flipped Congress at the midterm elections next year. Trump's "cut" may accelerate the end of America's starring role in global entertainment -- while giving Japan its close-up.
Understanding this moment means seeing past Trump's rhetoric to the real game: America is abandoning a trade surplus it spent decades building. Someone will inherit that advantage.
