Paper tariffs felt across news industry

08/08/2018

The United States Commerce Department last week softened tariffs on Canadian newsprint that were instituted in January, although newspaper businesses nationwide—including this one—continue to feel the effects of elevated paper costs. 

“It’s basically screwed up everything,” said Joe Vetter, who for two decades has owned Healdsburg Printing, which prints the Light and six other North Bay weeklies. Mr. Vetter has been in the printing business since the ’80s and said he hasn’t seen prices this high since that time. 

The cost of newsprint nationwide has gone up about a third since the beginning of this year after Canadian companies hiked up prices to contend with rising tariffs, and U.S. counterparts followed suit. 

“We’re relieved that now there is more product, however, as in the beginning there was just a plain shortage,” Mr. Vetter said. “We had to order ahead, source from companies we don’t usually source from, and do what we could within our company to keep up with the new cost of paper without putting people out of business.” 

The Commerce Department acted after a Washington State company, North Pacific Paper Company, filed a trade complaint arguing that Canadian government subsidies to paper companies have disadvantaged American paper manufacturers. 

Canadian paper mills have produced an estimated 60 percent of newsprint used in the United States, which consumes a total of 2.4 million tons. 

Last Thursday, the Commerce Department said it would lower tariffs from the 22 percent imposed in March, up from the maximum of 10 percent that was required in January. The department said it would exact a 16.88 percent tax from one Canadian manufacturer, Catalyst Paper Company, which manufactures about a fifth of the U.S. paper supply; for several other Canadian companies, tariffs will stay below 9.81 percent to counter subsidies those manufacturers receive from the government.

Yet the Commerce Department decision is not final. The International Trade Commission could ultimately overturn or change it when it rules next month on whether the Washington company, North Pacific, suffered harm due to the Canadian subsidies. 

“Behind labor, the purchase of newsprint is the second largest expense. Putting a 32 percent increase to the cost of newsprint is having a devastating effect,” Tom Newton, executive director of the California News Publishers Association, said. Though no data has been aggregated on the effects, Mr. Newton anecdotally knows of papers that are reducing newsprint consumption by cutting print days or pages or laying off employees. 

The New York Times recently reported some troubling facts. The chairman of The Tampa Bay Times, which won two Pulitzer Prizes in 2016, told the newspaper he had let 50 employees go in April in a direct response to the tariffs, which he estimated amounted to $3 million to $5 million a year. The Robesonian newspaper in Lumberton, N.C., said it would no longer print the Sunday comics.

Reflecting broader troubles in the industry, the Bureau of Labor Statistics reported last year that more than half the jobs in the news industry disappeared in the past 15 years. A Pew Research Center report found the number of newspaper reporters covering state capitols fell by 35 percent between 2003 and 2014.

The Light, which pays more than $50,000 a year to print—about a third of annual overhead expenses—saw a roughly 3 percent rise in printing costs. 

Mr. Vetter, whose Healdsburg business has printed the Light for eight years, said his business has absorbed the remainder of the costs imposed by the paper tariffs. (Healdsburg Printing typically sources paper from West Coast companies through an East Bay broker, but occasionally uses Canadian manufacturers.) 

And paper is just one of his printing expenses affected by new tariffs. Another, aluminum, has also been a target of the Trump administration’s trade barriers. Used as leverage in North American Free Trade Agreement negotiations, new U.S. tariffs on aluminum—which is used to create printing plates—has also hurt the Healdsburg company. 

When Mr. Vetter bought the printing business with partners 22 years ago, he had 25 employees, many of whom worked more than full-time. Now, there are seven. Though he says the company is still viable—it’s just one of a small handful serving the greater Bay Area—he’s hoping to see the paper tariffs lifted in the coming months.