U.S. publishers worry about pricier newsprint with new tariffs

In this April 11, 2018, photo, production handler Pat Breidenbach straightens out a stack of newspapers while working at the Janesville Gazette Printing & Distribution plant in Janesville, Wis. Newspaper publishers across the U.S. already strapped by years of declining revenue say they're dealing with an existential threat: Recently imposed tariffs on Canadian newsprint driving up their business costs. (Angela Major/The Janesville Gazette via AP)
In this April 11, 2018, photo, production handler Pat Breidenbach straightens out a stack of newspapers while working at the Janesville Gazette Printing & Distribution plant in Janesville, Wis. Newspaper publishers across the U.S. already strapped by years of declining revenue say they're dealing with an existential threat: Recently imposed tariffs on Canadian newsprint driving up their business costs. (Angela Major/The Janesville Gazette via AP)

Newspaper publishers across the U.S. already strapped by years of declining revenue say they're dealing with an existential threat: Recently imposed tariffs on Canadian newsprint driving up their business costs.

The tariffs are a response to a complaint to the U.S. Department of Commerce from a hedge fund-owned paper producer in Washington state, which argues that its Canadian competitors are taking advantage of government subsidies to sell their product at unfairly low prices. The tariffs, imposed in January and increased in March, are not permanent yet. But newspaper publishers are bracing for another blow.

photo In this April 11, 2018, photo, production workers print and sort newspapers at the Janesville Gazette Printing & Distribution plant in Janesville, Wis. Newspaper publishers across the U.S. already strapped by years of declining revenue say they're dealing with an existential threat: Recently imposed tariffs on Canadian newsprint driving up their business costs. (Angela Major/The Janesville Gazette via AP)

Critics of the paper tariffs say the businesses that will ultimately be harmed are not Canadian paper producers, but U.S. newspapers that will have to cut staff and reduce publication days to afford higher prices of newsprint - the sheets newspapers are printed on. The newspaper industry employs just over 150,000 Americans, which is about 276,000, or 65 percent, fewer than two decades ago.

"To get an unbudgeted increase of this magnitude will be for many publishers very, very serious to catastrophic," said Tom Slaughter, the executive director of the Inland Press Association, which represents about 1,500 daily and non-daily newspapers in every state.

During a meeting last week with U.S. Sen. Bob Corker, R-Tenn., at the Cleveland/Bradley County Chamber of Commerce, Cleveland Daily Banner Publisher Ralph Baldwin said his newsprint prices have gone up 33 percent in the past year and "it is getting harder to even get newsprint" at any price.

"The tariff on Canadian newsprint is absolutely killing the newsprint and paper industry in the United States," Baldwin said. "We are crippled and living almost day to day on whether we can get newsprint."

The Banner publishes near what was once America's biggest U.S. newsprint producer in Calhoun, Tenn. But Resolute Forest Products, which acquired the former Bowater plant, phased out its newsprint production four years ago in favor of higher end paper and tissue products.

The newsprint tariffs reflect President Donald Trump's tough new approach to U.S. trade relations. Trump is engaged in a tense standoff with China over Beijing's sharp- elbowed attempts to gain access to U.S. technology. He's trying to renegotiate the North American Free Trade Agreement with Mexico and Canada. And his administration has wrangled with Canada directly over low-priced Canadian timber imports, Canadian barriers to U.S. dairy farmers, and now cheap Canadian newsprint.

The International Trade Commission is expected to make a final determination on the tariffs in August or September.

photo In this April 11, 2018, photo, production workers stack newspapers onto a cart at the Janesville Gazette Printing & Distribution plant in Janesville, Wis. Newspaper publishers across the U.S. already strapped by years of declining revenue say they're dealing with an existential threat: Recently imposed tariffs on Canadian newsprint driving up their business costs. (Angela Major/The Janesville Gazette via AP)

Canadian newsprint producers, including Resolute Forest Products, began paying an average of 6.53 percent more to export their products to the U.S. in January, when the Commerce Department concluded that would help offset the foreign paper mills' advantage over American companies. In March, the department increased the cost by another 22 percent after its preliminary investigation concluded that one Canadian company, British Columbia-based Catalyst, was underselling the uncoated groundwood paper newspapers use by that much less.

In response to the second increase, Catalyst said the tariff was "without merit" and that it "will continue to vigorously defend itself against an unwarranted and onerous U.S. trade action."

The North Pacific Paper Company, which New York hedge fund One Rock Capital Partners bought in 2016, petitioned for the tariffs, arguing that Canadian companies had an unfair advantage. NORPAC, which employs about 300 people, is the only U.S. paper producer making that argument.

"While our company understands the concerns recently surfaced by some newspaper publishers, which also face a challenging marketplace, we strongly disagree with the notion that their industry requires low-priced, subsidized newsprint from Canada to sustain their own business model," Craig Annenberg, the CEO of NORPAC, said in a statement.

The U.S. currently has five operating mills, including NORPAC. Three are in Washington state, with one of them partly owned by a Canadian company. Canada owns the remaining two in Georgia and Mississippi.

Publishers say Canadian imports are not the reason for the decline of U.S.-based paper mills, but rather a 75 percent drop in newsprint consumption over the last two decades. That has led mills to switch to more profitable products such as the boxes Amazon uses for shipping, said Tony Smithson, vice president of printing operations at Bliss Communications.

Before a final decision on tariffs is made, publishers can still make their case with the International Trade Commission, which has scheduled a hearing on July 17. Boyle said the ITC has the power to reject the tariffs, but Smithson isn't optimistic.

"If you think about it politically, once tariffs are in place, they're essentially permanent," he said. "There's no political capital in making a tariff go away, because then you put a target on yourself that says, 'Hey, this politician is getting rid of American jobs.'"

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