Tariffs imposed on Canadian-manufactured newsprint have sent the American newspaper industry clamoring to lobby the U.S. Department of Commerce and the International Trade Commission to reverse the duties before their costs go up and jobs are impacted.
More than 60 organizations representing newspapers and book publishers have united to form the Stop Tariffs On Printers & Publishers (STOPP) Coalition, arguing that the tariffs were imposed at the behest of one American paper mill for financial gain, while the vast majority of the paper manufacturing, newspaper and book publishing industries are in opposition.
According to Paul Boyle, senior vice president of public policy for the News Media Alliance, many newspapers in the Midwest, Northeast and Northwest source their newsprint from Canada. “Historically, it has been a North American market going back 25 years. You bought based upon what region you were located in the country,” Boyle, whose organization represents 2,000 newspapers, explained.
“The problem is that there has been a 75% drop in demand for newsprint in North America since 2000, so many mills have actually shut down,” Boyle said. “That’s 10 million tons of production taken offline. There are only five newsprint mills remaining in all of the United States. So there is really no ability to get supply from the U.S. All the mills are at 97% capacity.”
One American paper mill, the Washington State-based North Pacific Paper Company (NORPAC), filed antidumping and countervailing duty petitions with the U.S. Department of Commerce (DOC) last August, alleging that Canadian newsprint mills were selling their product in America below fair market value and that those mills were the beneficiaries of unfair subsidies.
In January, the DOC made a preliminary determination finding that “exporters from Canada received countervailable subsidies ranging from 4.42 to 9.93 percent.” The department instructed U.S. Customs & Border Patrol agents “to collect cash deposits from importers of uncoated groundwood paper [i.e., newsprint] from Canada based on these preliminary rates.”
In March, the department made a preliminary determination regarding the antidumping investigation into unfair pricing of Canadian newsprint, finding that Canadian exporters have undercut the fair market value of newsprint by as much as 22.16%. The department instructed customs agents to collect additional duties from importers of Canadian newsprint based on these rates.
“You have this one mill in Longview, Washington, [which] in our view is trying to use the protectionist environment to say, ‘We want to slap duties on Canadian manufacturers to protect U.S. industry and U.S. jobs,’” Boyle said. “But in reality, the U.S. industry doesn’t support what NORPAC is doing.”
Combined, the two rounds of duties imposed on Canadian newsprint imports represent as much as 32%. In response, newsprint mills have increased their prices by about 30%, according to Boyle.
As Boyle explained it, at the time that NORPAC filed its petitions last year there were six newsprint mills in the U.S., with three under Canadian ownership. Those three did not receive standing in the matter by the DOC. That left three American mills, including NORPAC – but NORPAC was the only one that supported a DOC investigation into the price of Canadian newsprint. As a result, when the DOC proceeded with its investigation, it was not at the behest of the overall industry, but of one mill it chose to allow to represent that industry, Boyle noted.
“The department of commerce erred, in our opinion, last August when they allowed the investigation to go forward,” Boyle said. The DOC is slated to make a final determination into the investigation on August 2, he noted. “Then also you have a quasi-judicial body, the International Trade Commission, that’s beginning its final investigation in the case. They’ll take questionnaires, [and] they’ll do surveys in the industry, including [of] consumers. They’ll do a hearing. They’ll take comments.”
A final outcome won’t be known until mid-September, according to Boyle. “And meanwhile, the tariffs have to be collected and it’s doing damage in the marketplace.”
There are 600,000 jobs in the printing and publishing industry in the U.S., according to the STOPP Coalition.
Dozens of newspapers across the country have issued op-eds in recent weeks criticizing the tariffs and emphasizing their negative impacts. In a March 23 piece, Paul Tash, chairman and CEO of Times Publishing Company, wrote that the tariffs would result in an additional $3 million to the Tampa Bay Times’ annual newsprint bill. “This is a kick in the teeth,” he wrote.
The Business Journal reached out to Digital First Media, the owner of Southern California News Group (which operates the Press-Telegram, Orange County Register, Daily Breeze and other regional papers) about the tariffs, but an executive declined to comment at this time.
Jay Beeler, publisher of the Beachcomber – a local newspaper that prints every other week – uses Southern California News Group for printing purposes. He told the Business Journal that “they are purchasing newsprint in huge quantities many months in advance and probably won’t pass on increases immediately.” He has not yet received any notification of a price increase for printing.
“If printing costs get excessive, there are a few steps that can be taken to offset them, such as less door-to-door distribution and more bulk drops,” Beeler said via e-mail. “Also there’s opportunity to raise ad rates assuming the competition does the same, since their printing costs will also rise.” Beeler noted that his business is diversified as a public relations and advertising agency, enabling him to offset lost revenues on the newspaper side through more promotional projects. “With 40-plus years’ professional experience, I know that diversification of income streams is the key to being recession proof,” he said.
Although a final determination on the tariffs won’t be made until September, they still stand until that time – leaving the newspaper and publishing industries to contend with increasing price points and future uncertainty for months. Boyle is concerned that some papers will go under in that time. “There is real concern that weeklies operating on thinner margins will just close,” he said.