US-Imposed Tariffs Unsettles Ad Market

U.S.-imposed tariffs can negatively impact the media and entertainment industry in several indirect but significant ways, even though intellectual property like films, TV shows, and digital content isn’t typically subject to tariffs as a "service." The effects stem from broader economic disruptions, increased production costs, and shifts in consumer behavior rather than direct taxation of media products. Here’s how these tariffs ripple through the industry:

First, tariffs on imported goods—such as electronics, manufacturing equipment, and raw materials—raise the cost of physical production. For example, cameras, lenses, lighting gear, and computing hardware (like GPUs and SSDs) used in filmmaking, post-production, and visual effects often come from countries like China, Japan, or Taiwan. With tariffs potentially reaching 54% on Chinese goods, 24% on Japanese products, or 32% on Taiwanese imports, as speculated in recent analyses, the price of this equipment could skyrocket. This forces studios to either absorb the costs (cutting into budgets) or pass them on to consumers, potentially reducing demand for new content or hardware-driven experiences like streaming devices and gaming consoles.

Second, the industry feels the pinch through supply chain disruptions. Hollywood relies heavily on global collaboration—think Canadian VFX studios, European co-productions, or Asian-made broadcast equipment. Tariffs on goods from Canada (e.g., 25% on non-energy imports) or Mexico could increase costs for shooting locations, props, and wardrobe materials sourced from these regions.

Third, advertising revenue—a lifeline for media companies—takes a hit. “The fundamental issue on tariffs is they cause uncertainty,” Martin Sorrell, founder and executive chairman of S4 Capital and founder and former CEO of WPP, told Marketing Brew. In uncertain times, he added, “clients delay decision-making—they either postpone, or they cancel, or they delay.”

Ninety-four percent of US advertisers said they were concerned about the impact of tariffs on ad spend, according to a survey of 100 “advertising decision-makers” by the Interactive Advertising Bureau conducted in February. Of those surveyed, 45% said they planned to reduce overall ad spend.

Many advertisers, like automotive or consumer goods firms, face higher costs due to tariffs on their supply chains (e.g., 25% on Mexican auto parts). In response, they often slash ad budgets, especially during economic uncertainty or a tariff-induced recession. With entertainment giants like Disney, Netflix, and Warner Bros. Discovery increasingly reliant on ad-supported tiers, a downturn in spending could shrink profits. Analysts have already lowered 2025 ad growth forecasts, with some predicting a drop from 7% to as low as 3.6% if tariffs persist.

Fourth, consumer spending power erodes as tariffs drive up prices for everyday goods—think groceries, cars, or electronics. When households pay more for essentials, discretionary spending on subscriptions, movie tickets, or theme park visits drops. Disney’s parks, which generate most of its profit, could see reduced attendance if tourism from tariff-affected countries like Canada or Europe weakens. Similarly, streaming services might face "streamflation," where higher operational costs lead to price hikes, risking subscriber churn.