Telugu industry rattled by Trump's 100 pc tariff on films made outside US

When a big-budget Telugu film is released, the buzz about its overseas box office—especially the US—is inevitable. From securing screens, to the extent of premiere shows, to the first weekend’s box office, everyone keeps an eye. Producers and distributors have been making investment decisions based largely on these stats.

But that golden path might soon hit a major roadblock. If US President Donald Trump's newly announced 100 per cent tariff comes into effect, it could severely impact Tollywood’s overseas business.

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Per Trump's new rule, any film that is produced outside the US would require a tariff equal to its purchase price. It should be paid before the movie's release. This means if a movie is bought for $1 million, another $1 million be shelled out as tax.

If implemented, this decision could be a major blow for Indian cinema, especially the big-budget movies

A goldmine for Tollywood

The US has been the single largest overseas market for Indian films, accounting for 30-40% of revenues. In many cases, the overseas box office alone recovers production costs. And it’s not just the big-budget films—even small and mid-budget Telugu movies have performed well in the US.

Ticket prices typically range between $15–$25, with premiere shows going up to $30. In addition to box office collections, OTT deals also hinge heavily on the US market performance. In short, for Tollywood, America is the lifeline. That’s why Trump’s 100% tariffs have been shaking the very foundations of the existing business model.

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Feared damages:
♦ Half of the revenue would go straight into taxes

♦ Ticket prices could double, audience numbers could shrink

♦ US release could become unviable for small films

♦ OTT rights could become costlier as subscription rates could go up

Audience base in US

Indian-origin people make up around 1.6% of the total US population. Along with them, Pakistanis, Bangladeshis, and other South Asians also show a strong interest in Indian films.

Even mainstream American audiences are tuning in for diverse content. So, the US market is no longer just about NRIs—it now caters to a broader, multi-ethnic viewership.

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Trump’s underlying aim appeared to be boosting Hollywood and encouraging more local productions. In this scenario, even Hollywood studios would feel some pressure to shift shoots domestically.

However, the real blow landed squarely on Tollywood. Why? Since Telugu films are rarely shot in the US, there is virtually no way around the tariff.

Legal standpoint

As of now, foreign films are treated as digital goods or intellectual property in the US. That’s why traditional customs duties did not apply to films. Only the standard state-wise sales tax on ticket sales was imposed. Trump’s order, now, is aimed at rewriting this practice altogether.

Some legal experts argue that tariffs generally would apply only to physical goods. Films and streaming rights fall under services. Hence, Trump's order may not withstand legal scrutiny. Still, the fear is spreading in the industry.

“Even the mere announcement of an executive order triggers confusion in the market. Until there’s clarity, distributors were likely to pull back on investments,” said a trade insider.

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Uncertain future

Telangana has already been in turmoil over uncertain ticket pricing policies. Now, this US tariff shock has added another layer of trouble. Upcoming big-budget films were planned with major overseas collections in mind. That revenue stream is now under threat. Small films may completely abandon hopes of a US release.

(This article was originally published in The Federal Telangana.)