Survey: Tariff is a direct threat to newspapers’ viability

Jun 14, 2018

WASHINGTON—Community newspaper publishers across the country widely expect higher production prices and newsprint shortages this summer because of the tariffs on Canadian newsprint in effect since January.
Tariffs up to 32 percent are being charged at the U.S./Canada border because of action by the U.S. Department of Commerce. The Commerce Department is in the midst of an investigation, assisted by the International Trade Commission, on whether Canada newsprint imports are being unfairly subsidized or are being sold in the U.S. at unfairly low prices. Preliminary tariffs began in early 2018 and will be in effect until a final determination in mid-September. At that point, the tariffs might be raised, lowered or eliminated, depending upon the results of the investigation.
The investigation was initiated on a complaint by North Pacific Paper Company, which was recently purchased by a New York investment firm. NORPAC complains that it faces unfair competition from the Canadian newsprint manufacturers.
Whatever prices were before the preliminary tariffs, they clearly are on the rise now. Most National Newspaper Association publishers responding to a recent NNA survey say they have seen printing price increases in the 15 percent to 30 percent range. Nearly half say they have been told by their suppliers to expect shortages of newsprint this summer.
“This is an extremely serious situation,” said Susan Rowell, NNA president and publisher of the Lancaster (SC) News. “Because many of our members do not directly buy paper, they are just beginning to feel the effects of the tariff. It will be a nasty surprise if the back-to-school issue, which is a money maker for newspapers and an essential guide for parents in many communities, cannot be published because there is not a sufficient paper supply. I am urging publishers to take action now, if they can, to ensure they will have paper as long as this situation lasts.”
NNA member Melissa Perner, editor and publisher of the Ozona (TX) Stockman, said she was alarmed to learn that her paper might not be able to procure paper at all this summer. The discovery was particularly disheartening because the Stockman was very nearly free and clear of the loan that financed its purchase. In a letter to her Congressional delegation, she said:
“We are a weekly paper, truly a mom-and-pop operation as my husband and I own the paper, not some major company. We are six months away from paying off our paper. This is our livelihood that we are fighting for.”
Although publishers urge members of Congress to contact the Department of Commerce about the plight of community newspapers, the effects of the economic shock are already being felt. Nearly 70 percent said they had reduced their page count. More than half responding to NNA’s survey are leaving staff positions vacant. Some have raised subscription or advertising rates. A few have already decided to sell the company.
But if the tariffs become permanent in September when the final Commerce decision is due, the rippling effects upon the domestic economy will be even more pronounced. Nearly half say they will have to lay off staff. Fifty-eight percent will not fill vacant jobs. Most will eliminate free public service advertising. And even more will list the company for sale. On a scale of 1 to 10, a third say the threat to newspapers’ viability is at the highest level, a 10, and virtually all rank the threat at 7 or above.
The newsprint shortage looms as the greatest cause of concern to many. Economists sometimes say shortages are good, if the effect of tariffs is to stimulate domestic production. But the five U.S. newsprint mills are already operating at close to capacity.
“This situation is not the classic supply/demand dichotomy where a stimulus in the form of higher foreign prices and shortages can spur investment in American jobs,” NNA General Counsel Tonda Rush said. “In this case, jobs will be lost, not created. With consumption rapidly falling at large metro dailies, new investment in newsprint mills is highly unlikely. More demand from weeklies, even if they are able to pay higher prices, will not create enough economic activity for paper producers to justify the 3- to 4-year investment period and the hundreds of millions of dollars required to start up a new paper mill. We are critical members of our communities but not huge users of paper by industry standards. A short ton roll of newsprint might be used in a day by a large national newspaper, but it would last a small weekly a couple of months. So, the tariff will accomplish nothing but pain. The result will be a lot of important community newspapers are going to be squeezed and their communities will suffer.”
Help may be on the way in a bill from Sens. Susan Collins, R-ME, and Angus King, I-ME. The PRINT Act of 2018, S. 2835, would suspend the tariffs while the Commerce Department is directed to study the economic well-being of the newspaper industry and to report back before pursuing trade duties further. A companion bill is expected to be introduced in the House.
Co-sponsors of the Senate bill are: Sens. Roy Blunt, R-MO; Doug Jones, D-AL; Deb Fischer, R-NE; Claire McCaskill, D-MO; Jerry Moran, R-KS; Roger Wicker, R-MS; Johnny Isakson, R-GA; Shelly Moore Capito, R-WV, and Lindsey Graham, R-SC.
An investigative hearing on the proposed final tariffs will occur July 17 at the ITC. Several members of Congress, including Jones, King and Collins, have said they will testify against the tariffs.