President Trump is threatening to open a new front in the global trade war.
- The president will direct trade officials to investigate imposing “a 100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands,” according to a late-night post on Truth Social.
- Up to this point, tariffs have been focused on physical goods.
Reality check: It is unclear how this might work. It is straightforward to slap tariffs on physical goods crossing borders, as the U.S. has done for centuries; less so for intellectual property like movies.
- It raises the question about the extent to which U.S. services will get dragged into the tit-for-tat trade war.
Threat level: The U.S. imports more goods from abroad than it exports. But the nation is the world’s largest exporter of services — tourism, video subscriptions, financial services, and more.
- Foreign nations cracking down on their consumption of services could weigh on U.S. industries that employ millions and in which the U.S. runs a trade surplus.
- Private sector service-producing industries are responsible for more than 70% of GDP, while goods-producing counterparts make up about 16%.
What to watch: There are already signs of services retaliation.
- Canadians are boycotting trips to the U.S. in response to Trump’s attacks on the country’s economy.
- European officials have also suggested they could hit back at the U.S. by targeting U.S. tech firms.
What they’re saying: “I think it’s a pretty ominous sign for the services sector,” Steve Miller, who chairs the Institute for Supply Management services business survey committee, said in response to a question from Axios on Monday morning.
- “If this is a precursor to expanding tariffs to intellectual property between countries, I think that that would have a larger impact on the services sector than some of the tariffs that we’re seeing on goods.”
