The U.S. International Trade Commission recently and unanimously rejected tariffs imposed on newsprint and other forms of uncoated groundwood paper imported from Canada.
The decision by the commission rejected tariffs levied by the Commerce Department in response to a complaint by a single U.S. paper manufacturer owned by a hedge fund. The commission currently has five members (one seat is vacant): two Republicans and one Democrat appointed by President Barack Obama; one Democrat appointed by President George W. Bush; one Democrat appointed by President Donald Trump.
We see three big problems with the tariffs:
1. The levies further threatened the financial viability of news organizations that produce print products.
Next to the price of employing people — salaries and benefits — paper remains the second-largest individual cost of a publishing company.
News organizations across the United States feared that rising newsprint costs related to the tariffs would force publishers to cut staff, reduce the size of newspapers or raise costs to consumers — or a combination of all three. Indeed, those impacts occurred in many markets.
We recognize our financial interest in this matter, but none of these outcomes were good for the workers, readers, advertisers and communities that depend on professional journalism published in print.
2. The tariffs didn’t make sense and weren’t supported by the vast majority of the affected paper producers in the United States and Canada.
Technically labeled as anti-dumping and countervailing duties, the tariffs were initiated by the U.S. Department of Commerce in response to a petition by one paper producer in Washington state. North Pacific Paper Company (NORPAC), which has fewer than 300 employees and is owned by a hedge fund, alleged that the Canadian government subsidizes paper exports.
The Commerce Department agreed and imposed the two duties — combined, ranging up to 32 percent — preliminarily in January and March. They were subsequently decreased but only slightly.
The newspaper industry wasn’t the only opponent. The American Forest and Paper Association was strongly opposed, noting that the uncoated groundwood and newsprint market is an integrated “North American market.”
Two of the leading Canadian producers have a total of nearly 4,000 U.S. employees.
More than 600,000 workers in the U.S. are employed in the publishing, printing and paper-producing industries that fought the tariffs because of their potential to kill jobs and depress economic activity.
3. The tariffs threatened to raise the costs of print advertising for companies with brick-and-mortar businesses.
It’s true that a significant share of advertising has migrated online, but print ads remain valuable to local and national companies that sell taxable products and employ millions of Americans.
The tariffs harmed the valuable newspaper industry, were opposed by all but one paper producer, and imposed unnecessary costs on businesses that rely on print. If the U.S. goal is to have smart trade, then these tariffs were dumb, and we credit the commission for recognizing as much.
This guest editorial was originally published in the Sarasota Herald-Tribune, a sister newspaper of the Daily News within Gatehouse Media.