• Can a US tax on foreign films hurt Sri Lanka’s film industry?

In early 2025, whispers from Capitol Hill became a roar: The United States, under Donald Trump’s second presidential run, was reportedly considering a 100% tariff on foreign films. The proposal, still in its early stages, is being marketed as a measure to protect and prioritise American cinema, but filmmakers and cultural commentators around the world are already taking notice.

For many in Hollywood, this may seem like a logical next step in the ‘America First’ economic playbook. But for filmmakers in smaller, growing industries, like Sri Lanka’s, the proposal, if implemented, raises a deeper question: What happens when cinema is treated like a commodity, rather than a culture?

A big deal, even for a small market

At first glance, Sri Lanka may not appear to have a stake in this game. Only a handful of Sri Lankan films have been screened in the United States, and for the average director, it isn’t seen as a primary market. Yet, the country’s recent international success, from festival appearances to streaming distribution, suggests a growing interest in reaching global audiences.

Veteran filmmaker Prasanna Vithanage, known for his socially conscious cinema, sees the proposed tariff as part of a familiar Trumpian strategy.

“You know how Trump does business,” Vithanage said. “He makes outrageous claims, then he bargains and tries to get a better deal.”

Though the tax is not yet in effect, he believes it would be “a huge blow to all film industries trying to break into the US market, especially India, China, and Korea.”

And it is not just theatrical distribution that would suffer. The impact, he explained, could ripple into streaming giants as well.

“If there’s a 100% tax, it will even affect platforms like Netflix and Prime. People will think twice before buying a film because of that taxation.”

This concern is echoed by Somaratne Dissanayake, a stalwart in the Sri Lankan film scene. While he acknowledged the limited number of Sri Lankan films screened in the US, he didn’t discount the consequences.

“They’ve introduced taxes globally, not just for us, so everyone is in the same boat,” he shared. “Given that we are a small country, it will be a blow for us. We do have some upcoming films to be screened in the US soon, and those will be affected unfortunately.”

The real cost

Perhaps the most worrying consequence isn’t commercial. It’s creative. Dissanayake pointed out that the harshest blow would be dealt to new and independent filmmakers, many of whom are already struggling in an industry with shrinking funding pools.

“There used to be many funds for new filmmakers for their first creative project,” he said. “Now their options will be limited by way of funds. They have no money, only creativity in hand, and I feel deeply saddened for them.”

Indeed, across the globe, state-backed film grants, cultural export programmes, and international co-productions have steadily declined in recent years. The US market, while often difficult to penetrate, has at least offered visibility and a small trickle of returns for non-Western films. A 100% tax, however, could turn that trickle into a drought.

Commodity or culture?

Underlying the debate is a broader question about how film is treated by global powers: As business or as art.

“The world is dominated by Hollywood,” said Vithanage. “In all countries, the US controls the market, especially with digitalisation. Very few countries have been able to stand against this, like the French government. They said they don’t consider films as a commodity and safeguarded their indigenous cinema.”

France, under its cultural exception laws, limits the number of foreign films allowed in cinemas and streaming platforms, while heavily investing in its own filmmakers. This has preserved a sense of national cinematic identity, and it’s something Vithanage believes Sri Lanka should learn from.

“We don’t have a US market currently, but we have to think about the future,” he noted. “I doubt we will be able to stand against this kind of move. But we should try. There’s no reason we need not do the same.”

He went a step further, suggesting that Sri Lanka should consider introducing its own tax on imported films, particularly American ones, with that money redirected into local film production.

“I don’t know how practical it is, since we’ve already signed the agreement (with the World Trade Organisation), but this would be the most ideal move,” he shared in reference to Sri Lanka’s trade commitments under the World Trade Organisation (WTO). These commitments generally discourage countries from imposing protectionist measures, such as selectively taxing imported goods like films, if those measures give unfair advantage to domestic industries.

While the idea of taxing Hollywood films and channeling that revenue into local cinema is appealing to many in the industry, doing so could violate WTO rules that prioritise open and non-discriminatory trade. Vithanage went on to acknowledge the legal and diplomatic constraints Sri Lanka faces, even if such a move might benefit its struggling film sector.

A hollywood that needs the world

Ironically, Vithanage pointed out, the very industry the tariff aims to protect, Hollywood, could end up suffering most.

“Hollywood won’t survive without their global audience,” he said. “If they impose such taxes, what will happen to Hollywood films? This is a death to Hollywood.”

It’s a bold statement, but not unfounded. International markets now make up the majority of box office returns for many American blockbusters. In 2023, for instance, more than 60% of ticket sales for major releases like ‘Avatar: The Way of Water’ came from outside the US. A tit-for-tat tariff system, where countries respond by taxing or limiting American films, could fracture the very ecosystem the US depends on.

A smaller impact, but still a warning

Naomi Apsara, executive producer of ‘Rani’, sees the situation through a slightly different lens. Her projects have not followed traditional distribution paths, especially in the US.

“The US is not a direct market we aim for,” she explained. “For ‘Rani’, it is not distributed in a conventional way in the US. A local expert in America will get the movie from us and have special screenings. So it won’t be a huge change for us.”

Yet even she acknowledged that broader policy shifts in a country as influential as the US can shape how others follow suit, and how the industry values international stories.

What does this all mean for Sri Lanka?

For now, perhaps the impact is not significant, but as the country’s cinema scene grows, it could matter greatly. With many award-winning features from Sri Lanka gaining global traction, Sri Lankan filmmakers are stepping into a world that is, increasingly, shaped by trade politics as much as artistic merit.

Today’s screenings in Colombo might not rely on the US. But tomorrow’s Cannes hopefuls, Netflix acquisitions, or diaspora events might. A tariff like this could close the door before many ever get to knock.

As Dissanayake warned: “For the newcomers to the industry, it will be a problem. Our industry is really small and upcoming.”

Perhaps the greatest risk, then, is not economic, but symbolic. If major players like the US begin to pull up the ladder, it could send a message to smaller industries: Your stories are only welcome if you can pay for the privilege.

Cinema, once a tool for cross-border connection, could become another casualty of nationalist policy. And for a country like Sri Lanka, where films have long been used to ask questions, build empathy, and tell truths that politics cannot, that loss would be felt far beyond the box office.