Tariffs: What’s Next for Netflix as Trump Launches Trade War?

NEW YORK, NY — The possibility of streaming platforms facing adverse effects from a newly initiated trade war has raised questions among analysts, particularly in light of tariffs recently imposed by President Donald Trump. The battle, reminiscent of previous conflicts over trade, could disrupt the financial stability of major services like Netflix on the global stage.

Laurent Yoon, a prominent analyst at Bernstein, shared insights on the implications of tariffs in a report last month, noting, “There’s been some noise around the impact of tariffs, churn post the X-Mas NFL games, and declining engagement.” His comments surfaced shortly before Netflix experienced a notable decline in stock value, a trend reflecting the market’s uncertainty regarding the streaming giant’s customer acquisition strategies.

In the wake of Trump’s declaration of “Liberation Day,” Yoon addressed the potential financial repercussions for streamers. He stated that Netflix is no stranger to tariffs, having already navigated the Digital Services Tax (DST) in various European nations since 2019. Countries such as the U.K., France, and Spain have levied this tax, which is designed to target online services based on local revenues.

“However, the sweeping rhetoric around tariffs raises questions about whether Netflix and other digital services providers could be subjected to increased taxes, jeopardizing their growth prospects in these vital markets,” Yoon explained. He presented three arguments suggesting that Netflix might mitigate the adverse effects of any potential tariff escalation.

The first point highlighted Netflix’s significant investment in local markets, asserting, “Netflix is good for Europe, or so Netflix could argue.” The platform has reportedly contributed thousands of jobs within the Europe, Middle East, and Africa region while investing billions in local content, thus supporting the media ecosystem across various European countries.

“Imposing tariffs would result in price hikes for the top streaming services in these regions, potentially hurting local consumers more than the service providers themselves,” Yoon noted, emphasizing Netflix’s leading position in key European markets, including Germany, the U.K., France, Italy, and Spain.

As of now, no European nations have instituted retaliatory tariffs against U.S. companies. “We will revisit our Netflix financial model and reflect the impact when and if a meaningful retaliatory tariff is imposed on U.S. digital services,” Yoon stated, maintaining an “outperform” rating on Netflix shares with a price target of $1,200.

Despite possible tariff implications looming, Yoon assessed Netflix’s market position, stating, “General sentiment could pose a potential headwind for Netflix in Europe and may exacerbate consumer cost burdens.” He projected that potential slowdowns in one of Netflix’s most critical growth markets could pose risks to its near-term earnings per share.

“Even with a 30 percent deceleration in subscriber growth in Europe, Middle East, and Africa (EMEA), we believe Netflix’s market value would remain comfortably above $1,000 in a stable environment,” Yoon concluded.

Furthermore, the analyst briefly outlined projections for Netflix’s growth driven by local content investment, forecasting EMEA subscribers to rise from 101 million in 2024 to 120 million by 2026, indicating a 9 percent compound annual growth rate. “However, a new tariff could lead to higher churn and further slow subscriber growth,” he cautioned, pointing out that increased Netflix subscription costs might inhibit the platform’s pricing strategies in Europe.

Yoon’s model indicates a 5 percent compound annual growth rate in average revenue per member in the EMEA by 2026. Yet, an unchanged rate due to tariffs could reverse growth projections to a decrease of 2.7 percent. “Combining the effects on both subscriber and average revenue growth could result in a potential 10 percent downside to our 2026 earnings per share forecast,” he suggested.

Amidst evolving discussions surrounding trade and tariffs, Netflix is set to announce its earnings after market close on April 17. Investors will undoubtedly be attentive to management’s insights regarding tariff impacts on its business performance.