U.S. papers ‘getting murdered’ by tariffs

Canadian newsprint duties take toll

WASHINGTON, D.C. • For years, George Arwady watched as the disruptive power of the Internet battered America’s newspaper industry.

But the publisher of The Republican, a daily in Springfield, Mass., believed the bleeding triggered by readers shifting to less-lucrative online news platforms had finally stabilized - after erasing thousands of jobs.

That all changed earlier this year, he says, when duties of up to 30 per cent were slapped on imported Canadian newsprint, causing costs to suddenly spike in a still-teetering business.

At Arwady’s paper, and the seven others The Republican prints on contract, publishers have been eliminating pages — and the local news that used to appear on them - reducing the number of copies they place in newsstands and trimming jobs to cope with the inflation.

“The market is getting murdered,” Arwady told the National Post. “I see these people are literally struggling to stay in business. The little guys I print, they have a hard time to pay my bills, some of them.”

The story is similar across much of the States, as newspapers try to absorb the soaring price of Canadian newsprint, their second-biggest outlay after salaries. The Tampa Bay Times – Florida’s largest paper – announced in April it would have to lay off 50 people, including “veteran reporters and editors,” to offset an extra $3 million in newsprint expense.

Before steel tariffs, before China tariffs, the duties imposed by the U.S. government on “uncoated groundwood paper” from Canada marked one of the first dramatic parries by the Trump administration against what it considers unfair trading practices.

On Tuesday, the U.S. International Trade Commission – which adjudicates complaints about foreign exporters – held a day of hearings on the issue, with testimony from Canadian and American paper makers, newspapers, and an unusual, bi-partisan parade of 19 congressmen all opposed to the duties. The current tariffs are preliminary, but the Commerce Department is slated to make its final decision on the question by Aug. 2, and the commission to follow in September. The duties will become permanent if both bodies agree they are required.

In the meantime, newspapers say they’re bearing an outsized burden for a trade war launched by a single, “outlier” company, targeting imports worth about $1.3 billion annually.

“It’s really been catastrophic,” said Mike Donnelly, publisher of Pennsylvania’s Indiana Gazette. “It’s your second-largest cost besides people, and you can’t take a 28 per cent increase without having dramatic effects on your bottom line.”

It all started with a complaint filed by the North Pacific Paper Company (NORPAC), a Washington state paper mill with about 300 employees, unsupported by the rest of the American paper industry. Newspapers note that NORPAC took the action after it was bought by a hedge fund determined to boost the plant’s profits, and won a sympathetic preliminary ruling under a president often at war with the news media.

Outside of the White House, though, there is growing political support for the news business, with bi-partisan bills introduced in both the Senate and House of Representatives to stop the duties. Newspapers might well need new legislation.

NORPAC argues, meanwhile, that many of the Canadian paper mills have benefited from various government subsidies, and dump their product into the States at less-than-fair value. That led to first countervailing, then anti-dumping duties, totalling in some cases as much as 32 per cent.

North Pacific says it faced “years of unfair, demoralizing market conditions” because of the Canadian plants’ situation. With the tariffs in place, the company announced in May it was hiring 50 new employees and re-starting an idled paper-making machine.

“NORPAC has a worldclass facility that can compete with anyone in the world on a level playing field,” CEO Craig Anneberg said in a statement then.

Commerce Secretary Wilbur Ross argued last month the added costs are a “very trivial thing” for newspapers, a penny or two per paper.

Arwady and Donnelly say the increases are greater than that, and argue they’re unable, regardless, to pass on even small price hikes to readers, who tend to quickly abandon print editions for the Internet rather than pay more. And yet those print papers often generate the lion’s share of crucial advertising revenue.

So newspapers are reducing their size by four to eight pages at a time, and shrinking staffs. Advance Publications, the parent company that owns the Republican, would have to shed 200 jobs across its chain of 20 or so papers to recoup the $5 million annual cost increase if the duties are made permanent, said Arwady.

The Decatur Daily in Alabama has cut 11 staff posts, newly elected Democratic Sen. Doug Jones told the Commission Tuesday, calling the tariffs an “existential threat” to local papers.

The Indiana Gazette is looking at eliminating three to five positions from a workforce of about 40, said Donnelly. Ross “is a brilliant businessman,” he said. “I think he knows this is going to be devastating, I really do … It’s going to cause an implosion in the market of dramatic proportions.”