The Trump-era tariffs have hit one industry particularly hard: Newspapers.
It has been just over six months since the U.S. Department of Commerce levied its first tariffs on Canadian uncoated groundwood paper, resulting in a significant rise in the cost of newsprint. Since then, newspaper publishers have struggled to adapt, incorporating newspaper section limits, cutting page counts, decreasing issue frequency and laying off staff.
Small, local newspapers have been hardest-hit. The Powell Tribune is a small semi-weekly paper based in Powell, Wyoming, with a circulation of 4,000. The paper’s newsprint costs have skyrocketed over 30% since the tariffs were put into place, said the paper’s publisher, Dave Bonner.
“It has been painful,” he said. Since the tariffs, his paper has had to lay off a full-time reporter and reduce one reporter’s position to part-time. This may not seem like a lot, but for the Tribune, it is a large percentage of its staff: There are 4 full-time and one part-time newsroom staffers left, said Bonner.
Newspapers of New England, which owns and publishes eight newspapers along with smaller periodicals, has experienced price increases of around 25% in the past six months, said the company’s president and CEO Aaron Julien.
“It’s been a serious problem,” he said. The company has had to cut page counts and positions, though Julien declined to provide specific numbers. ”Over the course of a year, we are talking about hundreds of thousands of dollars in expenses that have to be made up one way or another,” he said.
The Tampa Bay Times, which is published by the Times Publishing Company, is in the process of laying off approximately 50 people across the organization as a direct result of the tariffs, said Sherri Day, the paper’s communications and grants director. In March, Times Publishing Company chairman and CEO Paul Tash wrote a column saying the tariffs would add more than 30%, or $3 million, to the Tampa Bay Times’ annual newsprint bill.
“This is a kick in the teeth,” he wrote at the time.
Newsprint accounts for 10% to 20% of a newspaper’s operating cost, just behind employee wages, said John Snyder, CEO of PAGE Cooperative, which represents over 600 daily newspapers around the country. He estimates 60% to 70% of newsprint comes from Canada.
“The industry was challenged before the tariffs, but the tariffs have made things much worse,” he said.
It’s not just small and midsized newspapers that are feeling the heat; large publishing companies are in a similar boat. USA Today publisher Gannett Co. Inc. GCI, +0.75% said in its most recent 10-K filing that its “operations may be impacted significantly by changes in newsprint prices,” adding that the price it pays for newsprint could increase due to a number of factors, including “the imposition of tariffs or other restrictions on non-U.S. suppliers of paper.”
A spokeswoman for Gannett said in an email that “an adjustment of even pennies is a financial burden to a publisher such as Gannett.” Gannett publishes over 100 print products, she said.
The tariffs were a response to a complaint from the North Pacific Paper Company, or NORPAC, an American paper company based in Washington State. NORPAC said Canadian paper companies received subsidies from the Canadian government, which allowed them to offer lower prices than competitors. This, NORPAC alleged, gave them an unfair advantage. After investigating, the Commerce Department said in January it found countervailing, which refers to when goods are subsidized by a foreign government, had occurred, issuing a preliminary tariff of up to 6.5% on Canadian uncoated groundwood paper. The department said in March that it had also found evidence of dumping, which refers to when goods are sold for less than what is considered fair market value, and added another tariff of up to 22%.
The tariffs on Canadian uncoated groundwood paper are just a few of several implemented this year, including on imported aluminum and steel.
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NORPAC employs around 400 people and makes about 50% of the uncoated groundwood paper produced in the U.S., said company spokesman David Richey. In October 2017, the company shut down one of its three paper machines “as a direct consequence of unfair competition,” Richey said. There are about 120 jobs associated with each machine, he said.
Since the implementation of the tariffs, “NORPAC has been able to restart the machine that had been idled and rehire 50 employees. Today we are operating at full capacity, looking to fill another 40 positions, which in rural southwest Washington is very significant,” said Richey.
The tariffs are not necessarily permanent; the U.S. International Trade Commission, or ITC, must determine whether the imports of Canadian uncoated groundwood paper harms domestic industry before the tariffs can remain. The ITC and Commerce Department are expected to make a final decision by fall of 2018.
The preliminary tariffs implemented in January and March were “one more large headwind” that contributed to the Dunn-Rankin family’s decision to sell Sun Coast Media Group to Adams Publishing Group this month, Sun Coast CEO David Dunn-Rankin said in an email. The company publishes several newspapers in Florida, including the Venice Gondolier, the North Port Sun and the Charlotte Sun.
“The tariffs were the major contributor to our newsprint rising 43% from the low to where they are today. It was a million dollar hit to our small family newspaper,” he said.
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Adding to the woes of the newspaper industry is the effect the tariffs have had on print advertisers, said Paul Boyle, senior vice president of public policy at News Media Alliance, a trade organization representing 2,000 news outlets across the U.S. Commercial printing companies are paying more for paper, forcing them to raise prices on customers, including advertisers who run prepaid inserts in papers. This, in turn, has caused advertisers to order fewer print ads, a dwindling but still-important source of revenue for newspaper companies.
Commercial printing company Quad/Graphics, Inc. QUAD, +0.53% has seen this phenomenon firsthand. Many of the company’s retail insert clients print on newsprint paper, Quad’s director of government affairs Patrick Henderson said. The tariffs have forced Quad to raise prices, which has resulted in fewer orders. The company generally sees its total printing volume decline by 3% to 4% each year, but it has seen a double-digit drop between 2017 and 2018, Henderson said.
“People are deciding they can’t afford this,” he said. “They only have only so much in their budget for ads.”
Americans are depending less and less on print as they increasingly consume their news online. Advertisers, once the main source of revenue for print newspapers, have left for the greener pastures of digital spaces. Newspaper companies have struggled to adapt, even as they turn to internet-based sources of revenue, such as online subscriptions and ads.
Despite the industry’s best efforts, advertising revenue has been on the decline for over a decade, dropping 67% between 2005 and 2017, from $49.4 billion to $16.5 billion, according to data from a recent Pew Research Center analysis. Digital and print weekday newspaper circulation has dropped an estimated 42% in the same time frame, from 53.3 million to 30.9 million.
“This is an existential moment, especially for small newspapers,” said Boyle of the News Media Alliance.
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