Trump’s Tariffs on Canadian Newsprint Are Overturned

August 29, 2018

By Catie Edmondson and Alan Rappeport, The New York Times

WASHINGTON — The United States International Trade Commission on Wednesday overturned a Trump administration decision to impose tariffs on Canadian newsprint, saying that American paper producers are not harmed by newsprint imports.

The unanimous decision by the five-member body eliminates tariffs that have been in effect since January, handing a win to small and medium-size newspapers, which have struggled to absorb the cost of higher newsprint and have made cuts, including layoffs, as a result.

The printing press of The Columbian newspaper in Vancouver, Wash. Newsprint price increases from tariffs have forced dozens of newspapers across the country to make cuts or close.  Credit: Natalie Behring/Getty Images

The Commerce Department imposed tariffs as high as 20 percent on newsprint from Canada after North Pacific Paper Company, a paper mill in Washington State, filed a complaint alleging that subsidies the Canadian government provides to its manufacturers put American paper companies at a disadvantage.

The commission, which is an American government agency that reviews unfair trade practices, said in a statement that it “determined that a U.S. industry is not materially injured or threatened with material injury by reason of imports of uncoated groundwood paper from Canada.”

Details of the commission’s findings will be published by Oct. 8, the statement said.

The decision will allow Canadian paper providers to stop paying tariffs that had already caused widespread damage in the struggling newspaper industry.

Dozens of regional newspapers across the country have cut staff, reduced the numbers of days they printed and, in some cases, closed entirely, unable to contend with the increased costs.

Andrew Johnson, the president of the National Newspaper Association, a group of about 2,300 community newspapers, cheered the decision and said he was thankful that “the commissioners did the right thing.”

“This is a great day for newspapers,” Mr. Johnson said. “It sends a loud message.”

But “there is a lot of damage that has been done,” added Mr. Johnson, who is also the owner and publisher of three weekly newspapers in Wisconsin.

“It is our hope that some progress will be made toward restoring the page counts and news coverage among the weekly newspapers,” he said. “Once those costs start going down at the printing level, I think you’ll see the weekly newspapers adding their pages back.”

The decision by the commission deals a blow to the North Pacific Paper Company, which filed a complaint last year arguing that dumped and subsidized imports of uncoated groundwood paper from Canada were depressing prices and eroding profitability.

Norpac was the only manufacturer to file a complaint. The rest of the industry has blamed the declining print newspaper business, rather than Canada, for its struggles. The situation thrust Norpac and its owner, the private equity firm One Rock Capital Partners, into the spotlight as newspapers complained that their costs were surging as a result of the tariffs.

One Rock, which is based in New York, bought the mill in 2016 and, according to people within the paper industry, most likely paid a premium for the business in hopes that it could make the case for tariffs and boost the business’s revenue. Now it appears that bet has been lost.

“We are very disappointed in the U.S.I.T.C.’s negative determination, given that the record clearly shows that the domestic industry has been materially injured by dumped and subsidized imports from Canada,” said Craig Anneberg, Norpac’s chief executive. “We intend to review the U.S.I.T.C.’s written determination when it is issued in a few weeks, and we will assess our options at that time.”

The ruling was welcomed by the Canadian manufacturer Catalyst Paper Corporation, which had been exporting more than 425,000 metric tons of newsprint into the United States before it was singled out and hit with the heaviest levies.

“Our industry continues to face a challenging operating environment stemming from increasing costs and declining demand,” Ned Dwyer, the president of Catalyst, said in a statement. “Today’s ruling is a welcome break for Catalyst, our customers, employees and the communities where we operate.”

While the tariff ruling offers a reprieve to newspapers, publishers say it may not result in jobs coming back or pages being restored. Instead, it probably just accelerated cost-cutting that would have eventually occurred anyway, given the industry’s declining readership and revenue.

“The market is really upside down right now,” said Crystal Dupre, the publisher of The Bryan-College Station Eagle in Bryan, Tex. “When any recession hits, businesses, they’re forced to make decisions that they wouldn’t necessarily want to make. Once they make them and see they can still function that way, do they go back to how they were? I don’t know the answer.”

Jay Seaton, the publisher of The Grand Junction Daily Sentinel in Colorado, said the changes newspapers made in response to the tariffs were probably inescapable “for newspapers who want to remain viable long into the future.”

“I think the tariffs perhaps accelerated an inevitable conversion to digital delivery of news and newspapers,” Mr. Seaton said. “My preference would be to be able to deliver The Daily Sentinel to people in every medium that they want to consume it.”

But facing new economic realities, including increasing newsprint costs and decreasing advertising revenue, he said, publishers are “looking for any place where we can find efficiencies in our production that does not impair the quality of the news content itself.”

Members of Congress, many of whom protested the tariffs, praised the ruling, citing the important role the small newspapers play in their communities. Lawmakers on both sides of the aisle had lobbied the commission to rule against the tariffs, citing the damage they would inflict on local newspapers, and Senator Susan Collins, Republican of Maine, had introduced a bill that would pause the tariffs while a commission studied their effect on small papers.

“These tariffs were extremely harmful to our regional newspapers — the lifeblood of our local communities — and I worked hard to remove them,” Senator Chuck Schumer of New York, the Democratic leader, said in a statement. “The International Trade Commission made the exactly right decision today to completely eliminate them.”


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