It has been just over six months since the U.S. Department of Commerce levied its first tariffs on Canadian uncoated groundwood paper, resulting in a significant rise in the cost of newsprint. Since then, newspaper publishers have struggled to adapt, incorporating newspaper section limits, cutting page counts, decreasing issue frequency and laying off staff.
Newspapers of New England, which owns and publishes eight newspapers along with smaller periodicals, has experienced price increases of around 25% in the past six months, said the company’s president and CEO Aaron Julien.
The Tampa Bay Times, which is published by the Times Publishing Company, is in the process of laying off approximately 50 people across the organization as a direct result of the tariffs, said Sherri Day, the paper’s communications and grants director. In March, Times Publishing Company chairman and CEO Paul Tash wrote a column saying the tariffs would add more than 30%, or $3 million, to the Tampa Bay Times’ annual newsprint bill.
Adding to the woes of the newspaper industry is the effect the tariffs have had on print advertisers, said Paul Boyle, senior vice president of public policy at News Media Alliance, a trade organization representing 2,000 news outlets across the U.S. Commercial printing companies are paying more for paper, forcing them to raise prices on customers, including advertisers who run prepaid inserts in papers. This, in turn, has caused advertisers to order fewer print ads, a dwindling but still-important source of revenue for newspaper companies.
Commercial printing company Quad/Graphics, Inc. has seen this phenomenon firsthand. Many of the company’s retail insert clients print on newsprint paper, Quad’s director of government affairs Patrick Henderson said. The tariffs have forced Quad to raise prices, which has resulted in fewer orders. The company generally sees its total printing volume decline by 3% to 4% each year, but it has seen a double-digit drop between 2017 and 2018, Henderson said.
“People are deciding they can’t afford this,” he said. “They only have only so much in their budget for ads.”
The tariffs were a response to a complaint from the North Pacific Paper Company, or NORPAC, an American paper company based in Washington State. NORPAC said Canadian paper companies received subsidies from the Canadian government, which allowed them to offer lower prices than competitors. This, NORPAC alleged, gave them an unfair advantage. After investigating, the Commerce Department said in January it found countervailing, which refers to when goods are subsidized by a foreign government, had occurred, issuing a preliminary tariff of up to 6.5% on Canadian uncoated groundwood paper. The department said in March that it had also found evidence of dumping, which refers to when goods are sold for less than what is considered fair market value, and added another tariff of up to 22%.
NORPAC employs around 400 people and makes about 50% of the uncoated groundwood paper produced in the U.S., said company spokesman David Richey. In October 2017, the company shut down one of its three paper machines “as a direct consequence of unfair competition,” Richey said. There are about 120 jobs associated with each machine, he said.
To save at most 400 jobs, the cost to the US newsprint and ad industry likely measures in the thousands. The newspaper industry is an aging dinosaur and these tariffs will speed up the extinction.
Yes, it's stupid.
Canada Hits Back
The Canadian government confirmed Sunday that it has imposed tariffs on US exports worth 16.6 billion Canadian dollars ($12.5 billion).
More than 40 US steel products attract tariffs of 25%. A tax of 10% has been levied on over 80 other American items including toffee, maple syrup, coffee beans and strawberry jam.
The response from Canada is designed to be proportional, with the new taxes being based on the amount of steel and aluminum shipped last year from Canada to the United States.
Last week, the European Union imposed additional tariffs of 25% on US products such as motorcycles, orange juice, bourbon, peanut butter, cigarettes and denim. Mexico has also imposed new tariffs on the United States.
Trump is Clueless About Trade
I am amazed at the number of people who believe Trump knows what he is doing.
Once again, If Canada really is "dumping" paper below cost (and that was the finding), that is to the decided benefit of the US and a cost to Canada.
Some readers assert Trump is playing 3-D chess or whatever to get what he wants. The notion is ludicrous.
Mike "Mish" Shedlock