No matter the newspaper size, new newsprint tariffs could cost jobs

By Jon Allsop, Columbia Journalism Review

An abridged version of CJR’s story is presented below. For the full story, visit http://bit.ly/2E3EgPX

Staff at the Buffalo News in upstate New York can see Canada out their cafeteria window. If traffic is light, it’s 10 minutes by car from their newsroom at 1 News Plaza to the Peace Bridge—which, halfway across the Niagara River, becomes Queen Elizabeth Way, Fort Erie.

But what used to be a thin gray line on a Google map is turning into a hard paywall for thousands of publishers across America. In mid-January, the US Department of Commerce slapped a tariff on Canadian newsprint, which is used by around 75 percent of US publishers and is particularly prevalent in the Northeast. Even though the duty may yet be reversed, American newspapers—already struggling to go to print in an era of rapidly declining circulation—have to pay it in the meantime. Many publishers fear it’ll add upward of 10 percent to their print costs, and could even result in job losses. “It’s putting a lot of fear into newspaper employees across the country,” says [the Buffalo News’ Bryan] Carr. “This is the worst time, probably in newspaper history, to be imposing tariffs.”

The tariff will affect publishers of all sizes, from The New York Times and The Wall Street Journal on down. But smaller papers will be hardest hit. The News Media Alliance, which represents many local newspapers in the US, says fighting to overturn the tariff will likely be its top campaign priority in 2018. In December last year, more than a thousand papers signed its letter urging Commerce Secretary Wilbur Ross not to levy it.

The tariff was initiated by the North Pacific Paper Company, or NORPAC, a Washington state–based newsprint producer which complained to the Commerce Department that Canadian paper producers have an unfair advantage over US competitors.

Publishers across America have lined up to slam NORPAC’s complaint. “With all the issues that we have going on in the world and the country, to see [the government] focusing in one mill which has complained about unfair pricing seems ludicrous to me,” says John Johnson, CEO of a family-owned stable of newspapers based in Watertown, New York — just 60 kilometers from the Canadian border. “It’s bizarre….I don’t understand it. I don’t agree with it. I think this is one of the things that makes people dissatisfied with government.”

In a statement shared with CJR, NORPAC CEO Craig Anneberg says: “While we understand the concerns recently surfaced by some newspaper publishers, we strongly disagree with the notion that their industry requires low-priced, government-subsidized, imported newsprint from Canada to sustain its business model. High-quality journalism in communities across the country should not depend on unfairly traded inputs that cause material injury to a US industry and American jobs.”

The US media industry is heavily dependent on Canada for the paper it turns into news — historically, Canadian wood has been better suited to making newsprint than that found in the northern US, while the country’s newsprint industry has benefited from good transport and energy infrastructure and loose environmental regulations. Today, Canada produces about three times as much newsprint as the US, even though the US consumes about five times as much newsprint as Canada, according to data compiled by printing company Quad Graphics. While 25 mills still make newsprint in Canada, only five do so in the US. (Newsprint production in both countries has dramatically scaled back since the turn of the century.)

Newsprint sells relatively cheaply but is still expensive to make, so it’s only really profitable to produce it at scale. Smaller US mills have long declined to make it, and as newspaper circulation has gone down in recent years, other papermakers have also pivoted away from newsprint toward more lucrative products.

This means newspapers stung by the new tariffs on Canadian newsprint can’t just pivot to domestic suppliers — there aren’t enough of them, and the ones that do exist don’t make anywhere near enough newsprint. Certain thinner grades of paper — which US publishers started buying to cut costs — meanwhile, can only be found north of the border.

“This [tariff] will have zero benefit for bringing any jobs back to the US in new paper production,” says Kevin Mason, managing director of Canadian firm ERA Forest Products Research. “We’ve seen with this softwood lumber [trade dispute between Canada and the US] recently that US consumers and homebuilders are bearing all the brunt of the duty. Canadians have completely passed it on. And that’s gonna be the case with [paper tariffs] too.”

In the meantime, however, news organizations that can scarcely afford extra expenditure will have to foot significant new costs to keep churning out papers. And if the newfound protectionist vision of US policymakers does win out long-term, then publishers will likely have to make some tough choices in the near future.

“If the tariffs stick and they’re of the magnitude they say they’re gonna be, then this is gonna drive up my costs where I’m gonna have to lay people off as a result of it,” says Johnson in Watertown, New York. “It’s gonna be really hard when I tell people that they’re losing their job so a multimillionaire hedge fund owner in New York City can pocket more [money]. They’re gonna be pissed about that.”

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