Why Trump's Hollywood tariff threat matters

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."

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