Today is
Friday May 23, 2025
(NEW YORK) -- Bitcoin surged to a record high on Thursday, vaulting more than 3% in early trading and hurtling past $110,000 for the first time.
The price of bitcoin stood at $111,385 on Thursday, extending a sharp rise that stretches back to the November election of President Donald Trump, a cryptocurrency supporter and investor.
Ether, the second-largest cryptocurrency, jumped 6%. The $TRUMP memecoin, a crypto coin launched by the president in January, increased nearly 6%.
A surge in the value of some cryptocurrencies in recent days followed a Senate vote to advance the GENIUS Act, an industry-backed bill that aims to regulate some digital currency.
The measure establishes rules targeting stablecoins, a type of cryptocurrency pegged to the value of another asset, often the U.S. dollar.
If enacted, the bill could allow such crypto coins to become a mainstream tool for digital payments and other financial instruments, setting the stage for an influx of investment in digital currency.
Critics say the measure fails to address conflict-of-interest concerns exemplified by Trump, and it risks endangering consumers and the wider economy with a weak set of restrictions.
Trump, who also backs a cryptocurrency firm World Liberty Financial, has denied any wrongdoing involving his crypto ventures.
The record high for bitcoin also coincides with a spike in Treasury yields amid deficit concerns centered on a domestic policy bill passed by the U.S. House on Thursday.
The nonpartisan Congressional Budget Office on Tuesday found the tax policies backed by Trump would add $3.8 trillion to the national debt. The finding comes days after a U.S. credit downgrade at Moody's in part due to the country’s deficit.
Higher yields increase the cost of U.S. borrowing and add strain to the nation’s finances. In theory, investors may seek out alternatives to the U.S. dollar as debit yields face upward pressure.
Bryan Armour, the director of passive strategies research at financial firm Morningstar, attributed the recent rise in the price of bitcoin to both industry regulation and bond market fears.
“??I suspect it’s a mix of regulatory adoption and fear for the dollar given the expectation of high government spending,” Armour said.
The price of bitcoin has surged about 40% since the presidential election. Over that period, the S&P 500 has declined 2%, while the tech-heavy Nasdaq has dropped 3%.
In July, Trump told the audience at a cryptocurrency conference in Nashville, Tennessee, that he wanted to turn the U.S. into the "crypto capital of the planet."
Trump promised to weaken federal oversight of cryptocurrency and establish the federal government's first strategic bitcoin reserve.
In March, Trump signed an executive order establishing the reserve of digital currencies, saying the move would position the U.S. “as a leader among nations in government digital asset strategy.”
On Thursday, Trump is set to attend a gala with hundreds of top investors in his memecoin, which an announcement described as an “intimate private dinner.”
The move elicited concern among some critics as a possible means of exchanging access to the president for financial gain.
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(NEW YORK) -- Stocks slumped at the open of trading on Monday after a downgrade of U.S. credit triggered a spike in debt yields that threatened to raise borrowing costs throughout the nation's economy.
The Dow Jones Industrial Average dropped 295 points, or 0.7%, while the S&P 500 fell 0.9%. The tech-heavy Nasdaq plunged 1.2%.
Moody's, a top ratings agency, cut the U.S. credit rating on Friday, dropping it one notch from the top rating of Aaa to a lower classification of Aa1.
The credit downgrade unleashed a selloff of U.S. debt, sending Treasury yields higher, which in turn raised the cost of U.S. borrowing and stoked investor fears about wider impact across the economy.
"This is a major symbolic move as Moody’s were the last of the major rating agencies to have the U.S. at the top rating," a Deutsche Bank analyst said in a client note shared with ABC News.
The Treasury selloff sent long-term yields soaring above the level attained in the immediate aftermath of President Donald Trump's "Liberation Day" tariffs. That spike in yields helped persuade Trump to suspend a major swathe of the tariffs, Trump later said.
The current spike in debt yields coincides with U.S. House Republicans' push to pass a domestic policy bill that includes broad tax cuts. The nonpartisan Congressional Budget Office warned last month that the bill would raise the nation's debt, which now stands at about $36 trillion.
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(NEW YORK) -- Consumer attitudes soured in May for the fourth consecutive month, even as President Donald Trump dialed back some tariffs. The reading came in below the level economists expected.
Shopper sentiment now hovers near its lowest level since a severe bout of inflation three years ago, University of Michigan survey data on Friday showed. Before that, the measure of consumer attitudes hadn't ever fallen this low.
The monthslong decline in consumer sentiment traces back to inflation fears and recession warnings set off by Trump’s initial rollout of levies.
A trade agreement between the U.S. and China this week slashed tit-for-tat tariffs between the world’s two largest economies and triggered a surge in the stock market. Within days, Wall Street firms softened their forecasts of a recession.
The U.S.-China accord marked the latest softening of Trump’s levies, coming weeks after the White House paused far-reaching "reciprocal tariffs" on dozens of countries. Trump also eased sector-specific tariffs targeting autos, and rolled back duties on some goods from Mexico and Canada.
The drawdown of tariffs coincided with data suggesting the economy remains in solid shape.
Inflation eased slightly last month, dropping to its lowest level since 2021, government data this week showed. Plus, the economy continues to add jobs at a solid pace.
Still, uncertainty looms over the economic outlook.
An array of tariffs remain in place, including an across-the-board 10% levy that applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum.
Even after the pullback, a 30% tariff on China far exceeds the level before Trump took office, posing a risk of price increases for a large swathe of products that includes apparel, toys and some electronics.
Walmart executives on Thursday warned of tariff-driven price increases for perishable imports such as coffee, avocados, bananas and roses, as well as toys and electronics.
Consumers showed signs of weakness last month as retail sales slowed, indicating shoppers may be pulling back as they await possible fallout from tariffs. The trend poses a risk for the wider economy, since consumer spending accounts for roughly two-thirds of economic activity.
The U.S. economy shrank at the outset of this year, registering a sharp drop-off from robust growth over the final months of 2024.
But a surge of imports ahead of Trump’s tariffs likely clouded the figure, since the calculation subtracts imports in an effort to exclude foreign production from the calculation of gross domestic product. Analysts cautioned that a lowering of GDP on account of this trend would not reflect economic weakness.
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(NEW YORK) -- Inflation cooled in the aftermath of President Donald Trump's "Liberation Day" levies last month, dropping to a four-year low and defying fears of tariff-driven price hikes, government data this week showed.
Even egg prices -- a symbol of rising costs -- fell about 10% in April compared to the previous month.
Still, prices for some products continued to soar, including everyday items such as coffee and beef.
It's normal for some prices to rise at a much faster pace than overall inflation, said Omar Sharif, founder and president of research firm Inflation Insights. The impact, he added, depends on the role such items play in a given person's finances.
"At the end of the day, what's important is the weight of the price change in your budget," Sharif said, noting stubborn price hikes for some goods may be offset by price drops for others.
Here's what to know about which prices are still climbing and what's behind the trend:
Coffee
Coffee prices soared 9.6% in April compared to a year ago, marking inflation four times higher than the overall rate. Instant coffee prices climbed even faster, jumping 13.5% over the past year.
The spike in coffee prices comes down to a dearth of supply alongside robust demand, meaning too many dollars are chasing after too few coffee beans, David Ortega, a food economist at Michigan State University, told ABC News.
Recent droughts in Vietnam and Brazil -- two of the world's largest coffee producers -- have restricted global output, Ortega said.
"These price increases are primarily driven by weather shocks," Ortega added.
Meanwhile, coffee drinkers avail themselves of few alternatives, resulting in consistent demand for the product.
Beef
A spike in beef prices also stems from a supply shortage that traces back to drought conditions, Ortega said.
Ground beef prices soared 10% in April compared to a year ago, while the costs of beef steaks increased 7% over that period, government data showed.
In 2022, a major drought in the beef-producing regions of the U.S. forced cattle herders to sell off more animals than usual, since the drought raised costs for cattle feed, which in turn made it more expensive for ranchers to maintain their herds, Ortega said.
Many of those ranchers, he added, sold off cattle necessary to produce future beef supply.
"The national beef herd is at its lowest level in decades – and demand is strong," Ortega said. "When those two things meet each other, you get this big rise in prices."
Car repairs
Car repair prices soared 7.6% in April compared to a year earlier, amounting to inflation three times higher than the overall rate.
The trend owes in large part to the rise of high-tech cars, equipped with features like rearview cameras and traffic sensors, which have added cost to even some routine repairs, Brian Moody, executive editor at Autotrader, told ABC News.
A shortage of workers has exacerbated the cost woes for repair companies as they bolster compensation to attract and retain employees, sending prices higher, Moody added.
"More people want technology in their cars," Moody said. "That technology requires greater skill to manage and fix, but at the same time, there's a shortage of technicians and workers."
Men's and women's outerwear
Overall apparel prices dropped slightly over the year ending in April, but some items may still deliver sticker shock for spring shoppers.
Prices for men's outerwear, including suits and sports coats, climbed 5.3% over the year ending in April, which amounts to inflation more than double the overall rate.
Women's outerwear costs -- which include jackets, coats and vests -- surged even faster, climbing 6.2%.
Sharif, of Inflation Insights, said the reason for these price increases is murky since they have coincided with a much slower rise in costs for producers of men's outerwear and an outright drop in production costs for women's outerwear.
The ample supply of such products means the price hikes likely result from quirks in consumer taste, potentially resulting from the prices commanded by specialty brands, Sharif added.
"Shifting trends in demand may be pushing prices higher," Sharif said.
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(WASHINGTON) -- This week's inflation report will offer a first look at how President Donald Trump's "Liberation Day" tariff announcement has impacted pricing across the United States.
Trump's tariff escalation, announced April 2, set off fears among economists and consumers about a possible burst of inflation, since importers typically pass along a share of such taxes in the form of price hikes.
Government data, which will be published Tuesday, is expected to show that pricing has defied such worries – at least for now.
Economists expect prices to have increased 2.3% over the year ending in April, which would mark a slight cooldown from the prior month.
However, many analysts anticipate a rekindling of inflation over the coming months as retailers begin to replenish inventory with goods imported after the tariffs took effect.
Even so, a rollback of some levies since "Liberation Day" may reduce the impact on inflation.
Trump paused a large swath of so-called "reciprocal tariffs" within days of the announcement.
On Monday, Trump temporarily slashed tariffs on China from 145% to 30%.
Levies on China will remain at the reduced rate for 90 days while the two sides negotiate a wider trade agreement, a joint U.S.-China statement said on Monday. China also agreed to temporarily cut its tariffs on U.S. goods from 125% to 10%.
The rollback of levies on Chinese goods is expected to reduce the average cost of tariffs per household this year from $4,900 to $2,800, the Yale Budget Lab found.
Still, the U.S. continues to impose an array of levies that have been issued since Trump took office.
An across-the-board 10% tariff applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum. Duties remain for some goods from Mexico and Canada.
Speaking last week before the rollback of tariffs on China, Federal Reserve Chair Jerome Powell said the economy remains in "solid shape" but warned Trump's tariff policy could cause higher inflation and an economic slowdown.
"If the large increase in tariffs that have been announced are sustained, they're likely to generate a rise in inflation and a slowdown of economic growth," Powell said.
"All of these policies are evolving, however, and their effects on the economy remain highly uncertain," he added.
Inflation levels are nowhere near 2022's peak of more than 9% -- though it remains slightly higher than the Federal Reserve's target rate of 2%.
The Fed last week opted to leave interest rates unchanged, keeping borrowing costs elevated as policymakers await the impact of tariffs.
Central bankers will announce their next interest rate decision on June 18. Investors peg an 88% chance of the Fed maintaining interest rates at current levels, according to the CME FedWatch Tool, a measure of market sentiment.
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(NEW YORK) -- U.S. stocks soared on Monday, just hours after the U.S. and China announced an agreement to slash tariffs for 90 days as the world’s two largest economies negotiate a wider trade deal.
The Dow Jones Industrial Average climbed 1,050 points, or 2.5%, while the S&P 500 jumped 3%. The tech-heavy Nasdaq increased 4%.
Facebook parent Meta, Amazon, and Starbucks each climbed more than 7%. Tesla, the electric carmaker led by White House advisor Elon Musk, jumped more than 6%.
Best Buy, the electronics retailer that previously warned of tariff-induced price hikes, saw shares surge more than 5%.
The U.S. agreed to cut tariffs on Chinese goods from 145% to 30%, while China committed to reduce tariffs on U.S. products from 125% to 10%.
The previous set of sky-high tariffs had threatened a surge in prices and a possible U.S. recession, experts told ABC News.
The move marks the latest rollback of far-reaching tariffs initiated by President Trump during a Rose Garden ceremony on April 2 that the president dubbed "Liberation Day."
Days after the announcement, Trump suspended so-called "reciprocal tariffs" on dozens of countries.
"Increasingly, it’s as if the last 6 weeks have been a bad dream and never actually happened," Deutsche Bank told clients on Monday in a memo shared with ABC News.
The U.S.-China accord came two days after an hours-long discussion between U.S. and Chinese officials in Geneva, Switzerland on Saturday.
Jonathan Pingle, chief U.S. economist at Swiss investment bank UBS, on Monday estimated the reduction in U.S. levies on China would bring average U.S. tariffs down from 24% to 14%.
In a statement to ABC News, Pingle described the agreement between the U.S. and China as a "cooling off."
The U.S. continues to impose an array of levies issued since Trump took office. An across-the-board 10% tariff applies to imports from nearly all countries. Additional tariffs have hit autos, steel and aluminum. Duties remain for some goods from Mexico and Canada.
Even after the Trump administration eased tariffs on Chinese goods, a 30% levy stands well above where tariffs began at the outset of Trump's term, Carol Schleif, chief market strategist at BMO Private Wealth, told ABC News in a statement.
"Base level tariffs are still substantially higher than where they started, with some level of damage likely to work its way into the economic data in the months to come," Schleif said.
Still, Schleif added, the U.S.-China agreement on Monday is "exactly what the stock market was hoping to see."
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(NEW YORK) -- A carousel ride and 12 flavors of fudge await shoppers at LARK Toys, a family-owned toy shop outside Minneapolis, Minnesota.
The glee on offer belies the stress behind the counter as President Donald Trump's 145% tariffs on China, which are set to trigger price increases and product shortages within a matter of a few months, co-owner Kathy Gray told ABC News.
The store imports four out of every five of its products from China, Gray said. A flurry of orders helped amass inventory before the tariffs, Gray added, but the shop lacks the funds and storage space to build up a major stockpile.
"It's threatening," Gray said. "This administration isn't operating with the best intentions of small businesses and regular folks."
LARK Toys is hardly the only small business that said it's under strain as a result of Trump's tariff policy.
Such concern is well-founded, analysts told ABC News, since small businesses typically lack the financial buffer, supply-chain flexibility and political influence of their larger counterparts.
Small businesses make up 99.9% of all U.S. firms, and account for more than two-fifths of the nation's gross domestic product, according to the U.S. Small Business Administration.
"Many small businesses are quite vulnerable and exposed to changes in trade policy," Ebehi Iyoha, a professor of business administration at Harvard University, who co-authored the study of small business sentiment, told ABC News.
The Trump administration has touted its achievements in support of small business, citing a cooldown of inflation and robust job growth.
"President Trump has restored optimism and opportunity for our job creators with a pro-growth economic agenda that has already slashed inflation, driven job creation, and delivered record investment," Kelly Loeffler, Administrator of the Small Business Administration, said in a statement late last month.
Trump last month paused a far-reaching set of so-called "reciprocal tariffs" targeting about 75 countries. At the same time, however, Trump hiked tariffs on China. Additional levies have hit autos, steel and aluminum.
U.S. importers face an average effective tariff rate of 25.2%, the highest since 1909, the Yale Budget Lab found last month.
The rapid shift in trade policy poses an acute risk for small businesses in part because they usually lack a large rainy-day fund, Jane Liu, a professor of economics at the University of Nebraska, Omaha, told ABC News.
A typical small business holds enough cash reserves to last 27 days, a JPMorgan Chase Institute study found in 2020.
"The larger firms have a better cushion," Liu said.
Small businesses also often face more pressure to raise prices for consumers, which can put them at a disadvantage with large competitors, some analysts said.
Tariffs raise prices for consumers if importers fail to swallow the tax burden by eating into their profits or requesting that a supplier sell the product at a lower rate in order to offset a share of the cost.
Small firms typically retain less capacity to eat profits or make price requests of suppliers, putting them at greater risk of losing out on shoppers due to tariff-related price hikes, Iyoha said.
"If you have a lot of bargaining power with suppliers, you can essentially say, 'If you don't eat some of these tariff costs and lower prices, I won't buy from you,'" Iyoha said. "If you had to guess who has more bargaining power with suppliers, I'm sure you'd guess large businesses."
In some cases, the Trump administration has granted relief from some tariffs.
Last month, the White House announced an exemption from China tariffs for a range of electronic devices. Days later, Trump said he had "helped" Apple CEO Tim Cook. Trump issued a one-month delay of auto tariffs after pressure from the Big 3 U.S. automakers: Ford, General Motors and Stellantis.
Small businesses typically lack the political influence of their larger counterparts, analysts said.
"Most small businesses don't have the money or access to the best, most savvy folks able to do this," Iyoha said.
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(WASHINGTON) -- President Donald Trump on Friday voiced a willingness to ease tariffs on China, saying on social media it "seems right" to slash levies from 145% to 80%.
The announcement arrives a day before Treasury Secretary Scott Bessent is set to begin trade negotiations with Chinese officials at a meeting in Geneva, Switzerland.
The potential tariff reduction floated by Trump may avert a virtual standstill of trade between the world's two largest economies, but the move would not substantially ease expected price increases for goods such as clothes, sneakers and toys, analysts told ABC News.
Product shortages would also remain a possibility at the lower tariff rate, they added.
"A tariff of 80% would still have a dramatic effect," Christian vom Lehn, an economics professor at Brigham Young University, told ABC News. "It would mean a significant impact for consumers."
Trump last month sharply increased tariffs on China, prompting China to retaliate with 125% tariffs on U.S. goods. The tit-for-tat measures set off a trade war with the third-largest U.S. trade partner, which accounted for nearly $440 billion worth of imports last year.
The tariffs elicited warnings from a slew of companies about the risk of price increases for U.S shoppers.
Toy giant Mattel warned in an earnings report this week of plans to shift some of its supply chain outside China, adding that when necessary it would take "pricing action in its U.S. business." The move follows similar messages from electronics chain Best Buy as well as Chinese e-commerce retailers Shein and Temu.
Chinese shipments to the U.S. have dropped significantly, falling 21% in April compared to a year earlier, data from China's General Administration of Customs on Friday showed.
Risks for consumers would continue to linger for two key reasons, analysts said: An 80% tariff would still amount to a punishing tax on imports, while uncertainty about the chance of another policy shift would make it difficult for companies to take full advantage of the lower rate.
Tariffs raise prices for consumers if importers fail to swallow the tax burden by eating into their profits or requesting a supplier sell the product at a lower rate in order to offset a share of the cost.
Under the current 145% tariff on Chinese goods, suppliers and importers face immense pressure as they try to bear some of the tax cost out of concern that higher prices would hurt sales, experts told ABC News. Due to the sky-high tariff, however, many sellers have little choice but to hike prices or risk losses, they added.
Those dynamics would remain in place at an 80% tariff rate, since it would still far exceed many companies' capacity to offset the added cost with lower profits, ??Jason Miller, a professor of supply chain management at Michigan State University.
"An 80% tariff really doesn't change things too much," Miller said.
Trump's announcement of a potential reduction of the tariff on China came two days after Trump ruled out any such lowering of the tariff level before negotiations.
The developments followed a weeks-long back and forth during which the two sides disputed whether they had already started discussing the tariffs.
The general sense of uncertainty would remain even after U.S. tariffs were to reach 80%, making it difficult for businesses to adapt their supply chains in a manner that would substantially ease costs and, in turn, offer relief for consumers, some analysts said.
"Even at a lower tariff, companies would have to be wondering whether this might go up again or or possibly come down again," David Andolfatto, an economist at the University of Miami, told ABC News.
If companies could trust the possible 80% tariff level as a long-term policy stance, they may choose to reroute supply chains outside China or even initiate plans for some domestic production, Andolfatto said.
But each trade policy announcement put forward by Trump appears subject to change, Andolfatto said, noting several modifications already undertaken by Trump.
"If anything changes, the Trump administration can unilaterally react and come back to the negotiating table," Andolfatto added.
For his part, Bessent has referred to the White House approach as a negotiating tactic, describing the policy changes as "strategic uncertainty."
Testifying before a House subcommittee this week, Bessent said the Trump administration had commenced negotiations with 17 of the top 18 U.S. trade partners, excluding China. Those countries account for the vast majority of U.S. foreign trade, Bessent said.
Trump unveiled the framework for a trade agreement with the United Kingdom on Thursday, marking the first such accord with any nation since the White House suspended some of its far-reaching "Liberation Day" tariffs last month.
"Every country wants to be making deals," Trump said in the Oval Office on Thursday, noting the upcoming talks between Bessent and Chinese officials.
"That will be very interesting," Trump said.
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(WASHINGTON) -- The Federal Reserve held interest rates steady on Wednesday, just weeks after President Donald Trump intensified calls for lower borrowing costs and voiced eagerness about the potential "termination" of Fed Chair Jerome Powell.
In recent days, Trump has dialed back his attacks on Powell, saying he will not fire Powell before the end of the top central banker's term next year. Trump has reiterated his displeasure with the level of interest rates, however, urging the central bank to lower them.
Speaking at a press conference in Washington, D.C., on Wednesday, Powell said the economy remains in "solid shape" but warned Trump's tariff policy could cause higher inflation and an economic slowdown.
"If the large increase in tariffs that have been announced are sustained, they're likely to generate a rise in inflation and a slowdown of economic growth," Powell said Wednesday.
"All of these policies are evolving, however, and their effects on the economy remain highly uncertain," Powell added.
When asked about Trump's call for lower rates, Powell shrugged off criticism from the president.
"It doesn’t affect our doing our job at all," Powell said. "We’re always going to consider only the economic data, the outlook, the balance of risks – and that’s it."
The move marked the Fed's second consecutive decision to maintain the current level of interest rates, repeating an approach taken in January. Before that, the Fed had cut rates at three consecutive meetings.
"For now, it does seem like a fairly clear decision for us to wait and see," Powell said.
"Risks of higher unemployment and higher inflation have risen," the FOMC said in a statement.
Last month, Powell raised the possibility that Trump's tariffs may cause what economists call "stagflation," which is when inflation rises and the economy slows.
If the Fed raises interest rates as a means of protecting against tariff-induced inflation under such a scenario, it risks stifling borrowing and slowing the economy further. On the other hand, if the Fed lowers rates to stimulate the economy in the face of a potential slowdown, it threatens to boost spending and worsen inflation.
Still, Powell pointed to solid economic performance as a reason to take a patient approach as policymakers await the impact of tariffs.
"For the time being, we are well-positioned to wait for greater clarity," Powell told an audience at the Economic Club of Chicago.
Powell noted the possibility of a shift in economic conditions, saying, "Life moves pretty fast."
The rate decision arrives days after fresh data showed robust job growth in April.
Despite flagging consumer sentiment and market turmoil, the labor market has provided a bright spot since Trump took office. Meanwhile, inflation cooled in March, the most recent month for which data is available.
Even so, recession fears are mounting on Wall Street as Trump's tariffs threaten to upend global trade. Goldman Sachs earlier this month hiked its odds of a recession from 35% to 45%. JPMorgan pegged the probability of a recession this year at 60%.
A government report last week showed the U.S. economy shrank over the first three months of 2025, much of which took place as Trump's flurry of tariff proposals stoked uncertainty among businesses and consumers.
U.S. gross domestic product, or GDP, declined at a 0.3% annualized rate over three months ending in March, according to government data released on Wednesday. The figure marked a sharp dropoff from 2.4% annualized growth over the final three months of 2024.
The rate decision on Wednesday also marks the first adjustment of borrowing costs since Trump's closely watched "Liberation Day" tariff announcement on April 2, which triggered the biggest single-day stock market drop since the COVID-19 pandemic.
Days later, Trump suspended a major swathe of the tariffs, sending the market to one of its largest ever single-day increases. A simultaneous escalation of tariffs on Chinese goods kept the effective tariff rate at its highest level in more than a century, the Yale Budget Lab found.
The White House is seeking to strike trade agreements with dozens of U.S. trade partners before the 90-day suspension of so-called "reciprocal tariffs" expires in July.
"As we gain a better understanding of the policy changes, we will have a better sense of the implications for the economy," Powell said last month.
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(WASHINGTON) -- President Donald Trump late Sunday proposed a 100% tariff on foreign-made films, saying the policy would counteract financial incentives that have drawn Hollywood productions overseas.
"WE WANT MOVIES MADE IN AMERICA, AGAIN!" Trump said in a post on social media.
Movie studios have increasingly moved production abroad in recent years as a means of cutting costs, industry analysts told ABC News, but it remains unclear how adding a tariff would succeed in boosting domestic production.
Instead, it could send costs soaring, the analysts said. It could also reduce the number of Hollywood films produced each year and potentially increase ticket prices, they explained.
"Essentially what Trump is trying to do is make it untenable for U.S. movie studios to produce movies abroad -- and the whole idea is that will stimulate production in the U.S.," said S. Mark Young, an accounting professor at the University of Southern California's Marshall School of Business who studies the movie industry.
"But it would cost more money for film production in the U.S.," Young added. "Where's that going to come from?"
Here's what Trump's proposed tariff on foreign-made films could mean for Hollywood and moviegoers:
Why are U.S. studios filming some movies overseas?
The rise of streaming services over the past decade fostered a surge in demand for scripted television and movies, as well as a spike in spending among studios, London-based consulting firm Olsberg SPI found last year.
In 2022, 599 scripted series aired in the U.S., registering more than double the 288 scripted series aired in 2012, Olsberg SPI said, noting that growth ebbed in the aftermath of the COVID-19 pandemic but the overall production rate still surpasses what it was a decade ago.
Alongside that growth, the provision of production incentives worldwide surged nearly 40% over the past seven years, Olsberg SPI said, as nations vied for about $250 billion in global content spending.
But the incentives drawing production away from Hollywood aren't all originating overseas; a slew of states have also boosted financial incentives to compete with moviemaking mainstays California and New York.
Financial incentives abroad have caused some productions to shift overseas, but they're hardly the only reason, Jennifer Porst, a professor of film and media at Emory University told ABC News.
COVID-19 lockdowns sent studios seeking alternative locations, as did widespread labor strikes in 2023 and the increasingly global audience with streaming subscriptions, Porst said.
"There are a whole range of reasons for why production comes and goes," Porst added. "Part of that is due to financial incentives."
What is Trump's proposed tariff on foreign-made films?
In a social media post on Sunday, Trump sharply criticized the production of Hollywood films overseas, claiming the trend had "devastated" parts of the U.S.
Trump claimed without evidence that the use of financial incentives abroad amounted to a "national security threat," saying that -- in his view -- such productions involve "messaging and propaganda."
Trump ordered the United States Trade Representative to begin the process of implementing a 100% tariff on foreign-made films.
In a statement on Monday, the White House said the policy hadn't been finalized.
"Although no final decisions on foreign film tariffs have been made, the Administration is exploring all options to deliver on President Trump's directive to safeguard our country's national and economic security while Making Hollywood Great Again," White House deputy press secretary Kush Desai told ABC News.
The proposal of a tariff on an intangible product like films poses a challenge for policymakers, since the U.S. cannot impose a direct tax on a film as it would a durable good, Tejaswini Ganti, a professor of anthropology at New York University who studies global film, told ABC News.
"If it's a tax on people going abroad to shoot, what is the tax on? Is it going to be, 'Here's the final budget and we'll add a tax on it'?" Ganti said. "What is the thing being taxed?"
Ganti also questioned the notion of a national security risk posed by Hollywood productions made abroad.
"If a Hollywood film is shot, say, in the United Kingdom, I don't understand how that is a national security threat," Ganti said. "It's still an American story, just shot somewhere else."
What could Trump's proposed tariffs mean for Hollywood and moviegoers?
It remains unclear whether Trump's tariff proposal would bolster domestic movie production, analysts said. Instead, the policy may force movie studios to choose between the tax burden associated with foreign-made films or the elevated cost of U.S. production, resulting in more expensive projects, fewer overall films and even less domestic output, they said.
"President Trump figured out the fastest way to dramatically reduce the number of films produced each year in America," Rich Greenfield, a media and technology analyst at LightShed Partners, said in a post on X.
Greenfield followed with multiple rocket ship emojis to indicate the anticipated rise in costs if the tariff plan moved forward.
"It would be a disaster," Young said, noting the likely added cost burden of a potential 100% tariff. "You can't wave a magic wand and expect more money to appear."
In an effort to weather added costs, the film industry may become more reliant on big-budget franchise films, leaving less opportunity for midsize or small-budget movies, Young added.
The extra tax burden could even hit the pockets of U.S. moviegoers, Ganti said.
"Could it lead to higher ticket prices? Sure," Ganti added.
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