Tariffs Could Push AI to the Center of American Filmmaking

President Trump’s proposed 100% tariff on movies made outside the United States may have been pitched as a patriotic lifeline to a “dying” Hollywood. But the real consequence could be something far less nostalgic: the rapid and widespread adoption of artificial intelligence to make films domestically. In a moment of economic pressure and political posturing, Hollywood may fully embrace AI not because it wants to, but because it has to.

The entertainment industry has been circling AI for years. The use of AI in filmmaking is already rising, and recent developments signal that AI may be moving from the wings to center stage. Just look at what happened when OpenAI debuted its video generation tool, Sora. Tyler Perry immediately paused a planned $800 million studio expansion in Atlanta.

Perry made it clear: with tools like Sora, he could recreate international locations, massive crowd scenes, or high-end effects in a virtual environment—no physical set required. “It hit me like a ton of bricks,” he said. “This changes everything.”

Perry isn’t alone in thinking that. And Trump’s tariff announcement may accelerate what was already happening.

AI Offers a Cheaper, Faster Way to Film

Trump’s proposed tariffs, meant to discourage the outsourcing of film production outside the United States, would make international shoots significantly more expensive. A $100 million film that once could shoot cost-effectively in Canada or Eastern Europe might now face enormous additional costs. For an industry already squeezed by pandemic-era disruptions, streaming competition, and shifting consumer habits, that’s an unsustainable equation.

AI, by contrast, offers a scalable solution. Generative video models, photorealistic virtual environments, and AI-assisted visual effects could cut film budgets by 10% to 20%, depending on the scope, and AI integration on $200 million blockbusters could save up to $40 million. That’s not pocket change. It’s enough to finance an entire second movie.

Virtual production tools, already embraced by shows like The Mandalorian, enable directors to shoot entire scenes on LED stages that mimic real-world settings. Add AI to the mix, and those virtual sets become smarter, more detailed, and more adaptable, able to react in real time to changes in lighting, camera angles, or even mood.

If a tariff makes it financially punitive to film Emily in Paris in Paris, AI gives producers a way to simulate the Champs-Élysées without ever leaving Burbank.

The Studio System Is Already Bracing for Disruption

Hollywood is under no illusions about the disruption AI brings. Netflix’s Ted Sarandos recently said the company views AI’s true value not in saving money, but in making films “10% better”. He cited improvements in pre-visualization, de-aging technology, and CGI refinement that AI enables at a fraction of the cost.

Meanwhile, Hollywood's visual effects industry is increasingly adopting AI-driven tools to streamline production processes. Software like Massive uses AI to simulate large-scale crowd scenes by generating thousands of digital agents, each with unique behaviors and movements. This technology allows filmmakers to create expansive battlefields or bustling cityscapes without the logistical challenges of coordinating thousands of extras. Such advancements not only reduce production costs but also expedite timelines, signaling a significant shift in how large-scale scenes are conceptualized and executed in modern filmmaking.

The pressure is mounting across the board, but especially for independent filmmakers and mid-tier studios. These players often lack the budgets to shoot in Croatia or capitalize on international tax incentives. They may not be directly affected by tariffs, but they’re likely to feel the downstream effects, such as higher domestic competition for crews and locations, fewer opportunities for co-productions, and a tightened supply chain for global talent and distribution. For these filmmakers, AI may be the only viable way to create high-end visuals, simulate international settings, and keep pace with the production values audiences expect, all while staying on U.S. soil.

The Creative Pushback Is Real, but Weakening

Of course, AI in film is controversial. Writers and actors went on strike in 2023, in part over concerns that AI would steal their livelihoods. Critics argue that AI-generated content is derivative and soulless, capable of remixing but not inventing.

But those concerns, while valid, may soon take a back seat to economic pragmatism. In a risk-averse, ROI-driven industry, innovation rarely waits for permission. Plus, the line between “AI-assisted” and “AI-created” is already blurry. Many directors, especially those working in sci-fi or animation, routinely use AI for storyboarding, voice modulation, or pre-editing. If generative video tools continue to improve, it won’t be long before indie filmmakers without Marvel-level budgets start skipping traditional production entirely.

A Two-Tier System Could Emerge

What could happen is a hybrid future: one in which big-name directors like Greta Gerwig still shoot on film, while the next Stranger Things or Extraction is generated largely in a server farm. AI won’t replace every movie, but it will democratize the ability to make movies that look expensive, even when they’re not.

This dual-track system may mirror what’s already happened in music, where studio-grade tools are now available to bedroom producers. In cinema, AI may empower a new class of storytellers to create globally compelling narratives without needing a passport or a $50 million budget.

A Tariff Could Be the Accelerant, Not the Cause

The trend toward AI in filmmaking was already underway. But President Trump’s tariff threat might provide the catalyst that forces the industry to move faster. By making international production financially unappealing, it drives studios to explore every domestic alternative, including synthetic ones. What happens next may not be a Hollywood ending, but it could be the reality that filmmakers need to live with.

Feature Image source: Nathan DeFiesta, Unsplash