Newspapers Scale Back Amid Tariffs on Newsprint
Posted August 2, 2018 8:36 p.m. EDT
WASHINGTON — The Commerce Department said Thursday that it would proceed with tariffs on Canadian newsprint, a blow to an already-struggling American newspaper industry.
The tariffs are somewhat lower than what the department initially imposed, offering publishers a small reprieve. The agency said it would cap the tariffs at 16.88 percent, down from 22 percent, and apply them to just one Canadian manufacturer, Catalyst Paper Co. But the Commerce Department said it would also impose tariffs of up to 9.81 percent on several Canadian paper companies to counter subsidies that those manufacturers receive from the government.
While the tariffs are not as severe as many in the industry had feared, much of the damage has already been done. The higher tariffs went into effect in January, after the Commerce Department issued a preliminary decision siding with a paper company in Washington state, which accused Canadian manufacturers of unfairly benefiting from government subsidies that allowed them to sell newsprint at artificially low prices.
In response, newspapers across the country, already struggling to maintain their bottom lines, have cut staff members and reduced their print offerings. The Tampa Bay Times and The Salt Lake Tribune have both blamed tariffs for layoffs. The Tampa Bay Times, which won two Pulitzer Prizes in 2016 for local and investigative reporting, laid off 50 employees directly as a result of the tariffs in April, its chairman and chief executive officer said in a statement. The Robesonian newspaper in Lumberton, North Carolina, said recently that it would no longer be able to print the Sunday comics.
Industry executives said that the lower tariffs would ease the pain somewhat but that it was still a huge burden on an industry that cannot afford higher costs.
“This is a useful and helpful step particularly as it applies to some manufacturers of newsprint,” said Paul Tash, chairman and chief executive of The Tampa Bay Times. “But the tariffs come at a time when the industry is facing a lot of headwinds.”
More than half the jobs in the news industry have disappeared in the past 15 years, the Bureau of Labor Statistics reported last year. And a report released by the Pew Research Center found that the number of newspaper reporters covering state capitols declined by 35 percent from 2003 to 2014.
Small newspapers catering to local communities have been hit the hardest, said Andrew Johnson, president of the National Newspaper Association.
“No one is going to work for free and no one is going to be covering the local stories that need to be told or local government,” he said. “The threat of this tariff is still looming over us.”
The Commerce Department decision is not final, and the International Trade Commission, an independent body, could ultimately overturn or change the decision when it rules next month.
Behind the decision is a single U.S. manufacturer: North Pacific Paper Co., a Washington-based paper mill funded by the private equity firm One Rock Capital Partners.
Company executives have rejected newspapers’ claims that they must buy cheaper Canadian newsprint to sustain their business models. Instead, they have pointed to subsidies the Canadian government provides to its companies, saying that has put U.S. paper manufacturers at a disadvantage and helped decimate the industry here.
“Low-priced imports from Canada have taken sales volume from us, depressed our prices and also undersell our uncoated groundwood paper in the United States,” Craig Anneberg, chief executive officer of North Pacific Paper Co., testified before the International Trade Commission last month.
On Thursday, the Commerce Department found that Canada had provided subsidies to certain companies and said it would assess tariffs of as much as 9.81 percent on newsprint from those companies in response.
“While not surprised, we’re disappointed with the U.S. Department of Commerce’s decision to keep these unwarranted duties in place, albeit at a lower rate,” Ned Dwyer, president and chief executive of Catalyst Paper, said in a statement. The company said it would face total tariffs of 20.26 percent on its exports.
Catalyst had been exporting more than 425,000 metric tons of newsprint into the United States before the tariffs went into effect, according to a spokesman. In 2017, Canada exported about 2.2 million metric tons of newsprint into the United States, according to the Commerce Department. A number of lawmakers, including Sen. Susan Collins, R-Maine, have sided with the newspaper industry and tried to halt the tariffs until an impact study is completed detailing the effects of the measure. A bill introduced by Collins in May has the bipartisan support of 20 senators, and an identical bill was introduced in the House by Rep. Kristi Noem, R-S.D. Over a dozen lawmakers testified against the measure before the trade commission last month.
“Local papers offer a unique and irreplaceable public service in rural areas, such as my home district in East Tennessee,” Rep. Phil Roe, a Republican, testified. “These businesses remain an integral part of our regional economy,” providing “workers with good-paying jobs as well as a steady stream of local revenue.”
Newspaper publishers hope that the International Trade Commission will rule this month that the tariffs should not apply to Canadian newsprint, in effect rolling the measure back. But many, like Johnson, are not holding their breath.
“The threat of this tariff is still looming over us; even though we had a favorable ruling today, the threat is very real,” he said. “I don’t see relief coming for some time.”