Netflix Faces Potential 20% Earnings Decline from Movie Tariffs

While many thought Netflix would be unaffected by new tariffs, it seems President Trump’s 100% tariff on foreign movies could have big implications for the streaming giant. According to Citigroup analyst Jason Bazinet, Netflix might see a 20% drop in earnings per share and an extra $3 billion in costs annually under a worst-case scenario. But, he suggests the impact could be less severe. Bazinet estimates that about half of Netflix’s content is produced outside the U.S., leading to this potential hit in earnings.

To counteract this, Netflix could cut down on international content, shift production to the U.S., or raise U.S. prices. By doing so, they could reduce the impact of the tariffs. While other analysts wait for more details from the Trump administration, there are concerns about how the tariffs will be calculated, who will foot the bill, and whether it will affect TV productions as well. Other companies, such as Disney, Lionsgate, and Warner Bros., are also expected to be negatively impacted by the potential tariffs.

There’s still a lot of uncertainty surrounding these tariffs, and many are awaiting further clarification. For now, studios may put a hold on production, leading to a decrease in content volume. Despite media stocks initially dropping after the news, they have since stabilized as Trump stated that no final decisions have been made. Trump’s administration aims to ensure national and economic security while supporting Hollywood, but the full implications of these proposed tariffs remain to be seen.