Trump's Canadian Tariffs Hit Home

Newspaper publishers across the U.S., already strapped by years of declining revenue, say they’re dealing with an exceedingly real threat: recently imposed tariffs on Canadian newsprint that is driving up their business costs.

The tariffs are a response to a complaint made to the U.S. Department of Commerce from One Rock Capital, a hedge fund which owns the North Pacific Paper Company (Norpac). One Rock Capital Partners bought Norpac’s mill in Washington state in 2016. Norpac argued that Canadian companies had an unfair advantage by taking advantage of government subsidies to sell their product at unfairly low prices. But Norpac was the only U.S. paper producer making that argument.

They employ about 260 people. In comparison, the newspaper publishing and commercial printing industry employs about 600,000 people. Critics of the paper tariffs say the businesses that will ultimately be harmed are not Canadian paper producers, but U.S. newspapers - from large city and national newspapers to local small community papers, such as Indian Time.

Large city newspapers from Salt Lake Tribune (Utah) to Tampa Bay Times (Florida) report to meet that cost papers will resort to laying off employees, reduce page counts, run smaller photos and/or scale back distribution from five days a week to three days a week all in an effort to afford higher prices of newsprint - the sheets newspapers are printed on.

The newspaper industry (separate from the printing industry) employs just over 150,000 has already been reduced from twenty years ago from 276,000 people.

In May, a bipartisan group of 10 senators led by Republican Susan Collins of Maine introduced a bill that would pause duties on paper imported from Canada for use in publishing.

According to a news release from Collin’s office, the legislation, “Protecting Rational Incentives in Newsprint Trade Act of 2018” or “PRINT Act”, would temporarily halt both the preliminary and any final duties while the Department of Commerce completes a study on the economic health of the printing and publishing industries. The study would, among other things, examine whether the tariffs would harm local news coverage, reduce employment in the publishing and printing industries, or harm local businesses that advertise in local newspapers.

On June 7 th, House Rep. Kristi Noem, R-SD and Charlie Crist (D-FL) introduced legislation to suspend tariffs on Canadian imports of uncoated groundwood paper which includes newsprint used by newspapers, book publishers, printers and direct mail companies. The House bill is identical to the Senate bill.

Many local newspapers and printers have already experienced price increases and a disruption in supply since duties were assessed earlier this year. The newsprint import tariffs - as high as 32 percent - would jeopardize the viability of the industry and threatens the over 600,000 U.S. workers in publishing, printing and related industries.

For example, a large metro newspaper can expect annual increases of about $3 million in printing costs and while larger papers might be able to survive the increase, smaller publications might not.

When asking a local printer/publisher if the tariffs will affect them, they stated, ‘they already have, we are preparing to send out notices next week on increased production costs of at least 25 percent’.

The newspaper you’re reading cost 10 percent more to produce than a few weeks earlier and will cost as much as 40 percent more in a few months if the tariffs remain. That increase will have to be absorbed somewhere, whether its laying off people, reducing the size of publication or increasing the price of the publication.

Payroll is the only expense that is bigger than newsprint.

Locally, John B. Johnson, CEO and Co-Publisher of the Watertown Daily Times stated, “As far as your request goes, paper pricing is up 30% year to date and, next to payroll, one of our single largest expense items. When your biggest expense item increases 30%, it puts considerable pressure on your business. The only way to alleviate that pressure is to reduce costs elsewhere. Sadly, that means the elimination of jobs in the north country. What bothers me the most is that the company who agitated for the tariffs is a single paper mill in Washington owned by a New York based hedge fund.”

While some media outlets have found their footing in the digital age, there are still many places where readers struggle to get access to broadband. Many consumers in small towns across the country, “like to read a paper front to back, to hold it in their hand.”

The proposed legislation in the House and Senate has received widespread support from Stop Tariffs on Printing & Publishing (STOPP), a broad-based coalition representing the U.S. printing and publishing industries that was formed to fight these crippling tariffs.

The STOPP Coalition is a group of associations representing printers, publishers, paper suppliers and distributors that represent mostly small businesses in local communities that employ more than 600,000 workers in the United States. They joined together to fight proposed government tariffs on newsprint that have been initiated by petitions lobbied by a single newsprint mill, NORPAC. Information about the STOPP Coalition can be found at http://www.stopnewsprinttariffs.org

The International Trade Commission is expected to make a final determination on the tariffs in August or September.