New Tariffs Hit Film Industry—What It Means for Netflix

Key Points

• President Trump has announced that a 100% tariff will be implemented on all foreign movies, leaving investors wondering where Netflix might go.
• With fundamental reasoning, two scenarios exist for the company to react to these tariffs.
• It seems institutions have weighed the outcomes and bought more Netflix stock based on what they see.

There are no clear-cut answers in today’s uncertain stock market, as President Trump's recently rolled-out trade tariffs start to hit industries that weren’t considered targets for these trading headwinds. When the announcements started, the attention seemed to be centered on the technology sector, specifically the semiconductor and chipmaking industry in Asian regions.

However, these tariffs quickly spilled over into the retail sector and, most recently, into entertainment. As some countries have made little effort to work around a deal with the United States, President Trump has come up with more creative ways to force the market into negotiations, with his latest strategic round of tariffs focused on the movie industry. After announcing a 100% tariff on foreign-made films, all eyes suddenly turned to one stock.

Shares of Netflix Inc. NASDAQ: NFLX have been on a tear for the entire year, as investors believe that this subscription business could outweigh the volatility brought on by trade tariffs due to its fundamental strengths and the ability of management and analysts to forecast earnings and revenues into the future, aiding in better outlooks and valuations in the future. Here are some angles investors can consider for Netflix on this new development.

Price Action: Netflix’s Latest Series

Over the past 12 months, Netflix's stock delivered a massive 88.8% rally to outperform most of its peers and the broader S&P 500. This reiterates the fact that as volatility and uncertainty hit the broader financial markets, Netflix was able to attract the attention and preference of investors due to its value proposition.

However, over the past week, Netflix stock declined by as much as 4% on the news of these 100% movie tariffs. Even with this adverse reaction initially, there are a few things to consider for the future of the stock that might create more stability and positive outlooks in the coming months and quarters.

Costs should be kept front and center when strategizing the potential scenarios that might come from these 100% tariffs, but here’s where the broader market participants think the stock could go next.

Institutions Are Okay With Uncertainty; Here’s Why

Even as Netflix's costs are set to rise, since a growing share of series and movies are produced internationally, not to mention a growing base of foreign users, there seems to be one clear advantage that Netflix can implement in the face of this new situation it has found itself in.

With such a massive presence in the entertainment industry, not to mention its large market share and growing footprint across the globe, Netflix has a few ways to get around these new tariffs. One of the first, but not so obvious, is that Netflix can simply insource production in the United States for foreign creators to avoid some of these tariffs.

Doing this would absolutely help the company in two ways. First, it can offset some of the significant added costs associated with importing foreign films. Second, it can gain political goodwill by bringing more production and exposure to the American scenery. This would mean added investment in the country, which might bring on potential grants and credits.

That one can be a little complicated because it rests on many assumptions and multiple-choice options for the company and other producers. A more straightforward strategy might come from the brand’s leverage and pricing power, avoiding some of the hoops that need to be jumped through to onshore production and further logistics.

This simpler alternative is to raise prices, which might be seen as negative at first because the initial assumption is that higher prices will lower future demand. However, when investors zoom out, it isn’t just Netflix that has this problem; it is pretty much all the others in the entertainment industry.

Knowing this, it becomes a race to see who is first to raise prices and lock in the additional audience before everyone else is either forced to take on the logistical onshoring or raise prices to avoid such heavy lifting. With both scenarios pointing to a Netflix win, it’s no surprise that some of the largest institutions warm up to owning more Netflix stock.

Such as those from Natixis Advisors, who decided to boost their holdings in Netflix stock by 1% as of May 2025. While this may not sound like much on a percentage basis, it did bring the group’s net position to a high of $520.4 million today, giving investors another sign of confidence in the future, one that might be filled with one of these two assumptions moving forward.