Hungary's thriving billion-dollar film industry, famously known as 'Hollywood on the Danube,' now faces a serious threat from potential tariffs proposed by former US President Donald Trump. The industry that has attracted major Hollywood productions could see its rapid growth halted by protectionist measures.
The Impending Threat to Budapest's Film Boom
Karoly Radnai, managing director of top Hungarian tax firm Andersen, described the situation dramatically: "It's like a meteor heading towards Earth. Either it passes, or it hits us." He emphasized that there's no way to adapt if Trump implements the tariffs, noting "that will be very bad for us."
Hungary has become a preferred filming location for numerous international productions, from epic sci-fi blockbusters like the "Dune" franchise to acclaimed arthouse period dramas such as "The Brutalist," which won four BAFTA and three Golden Globe awards. The country's appeal lies in its interesting locations, affordable labour costs, and a generous cash rebate program that reimburses 30% of local production spending.
Why Hungary Became Hollywood's European Hub
According to Timothy Havens, a professor at the University of Iowa, Budapest has become Hollywood's most important production hub outside the English-speaking world. The city's eclectic architecture and modern studios have proven particularly attractive to streaming services producing high-end series with spectacular visual elements.
"Those are expensive, whether they are special effects or location shots. In order to be able to afford these they need cheap labour, which Hungary can provide," Havens explained to AFP.
The numbers speak for themselves: in 2023, foreign film productions spent a record $910 million in Hungary, representing a four-fold increase over five years. The majority of this spending comes from US productions.
Beyond Economics: The Cultural Impact
Csaba Kael, Hungary's government commissioner for film industry development, highlighted that the benefits extend beyond financial gains. While visiting stars posting selfies with Budapest landmarks promote the country's image abroad, the productions also provide invaluable experience to local crews.
"The greatest directors and cinematographers are passing on their know-how," Kael said, citing "Rise of the Raven" as an example of successful Hungarian co-production.
The industry has also launched international careers, such as set decorator Zsuzsanna Sipos, who initially worked as an assistant to foreign colleagues before winning the Oscar for Best Production Design in 2022 for her work on the first "Dune" movie.
Uncertain Future and Government Response
The Hungarian film service industry began its rapid growth in 2004 with the adoption of the cash rebate scheme. However, the future of this program became uncertain when Prime Minister Viktor Orban's government suspended new project registrations in June.
Producer Daniel Kresmery, who works at HeroSquared, expressed concern: "For now, things are still working, but it could fall apart very easily." He warned that "the government needs to show their support properly in the long run again."
Meanwhile, the Trump administration's proposed 100% levy on movies produced abroad, announced in May and reiterated in September, threatens to disrupt the entire ecosystem. While experts acknowledge that outsourcing has hurt California's film industry, they remain skeptical about tariffs as a solution.
Professor Havens suggested that "producers will figure a workaround the tariffs if they are implemented," given the current model's importance to Hollywood's bottom line. As the Hungarian government engages with the Trump administration on the tariffs issue, the future of 'Hollywood on the Danube' hangs in the balance.
