ELLSWORTH — The U.S. Commerce Department announced last week that it would lower tariffs on Canadian newsprint imposed in January. But some industry representatives worry that the decision may be too late to help newspapers struggling with the increased costs.
Many of those papers have already cut back pages and laid off employees.
The department capped the tariffs at 16.88 percent, rather than the 32 percent imposed in January. They will hit one producer — Catalyst Paper — the hardest, at around 20 percent, with others paying between 1 and 10 percent.
But despite the reductions, a study filed by Charles River Associates with the International Trade Commission last month found that the tariffs will ultimately result in prices jumping around 30 percent for newsprint over the next two years, to $190 per metric ton.
The study also predicts the loss of 250 newsprint jobs after a short spike in employment.
The authors of the study write that the initial increase in cost will result in decreased demand as already struggling papers shutter or cut back on production, resulting in higher prices as supplies decrease.
Small and large papers across the country have already been hit hard by the increases. A paper in North Carolina cut the Sunday comics, while another went from 20 pages to 16 pages, citing the cost of newsprint as the primary reason.
The Tampa Bay Times cut 50 jobs after the announcement in January, also citing tariffs.
John Snyder, CEO of the PAGE Cooperative, which buys newsprint from nearly every major paper supplier in North America, said tariffs exacerbated the problems in a tight market. Prices for the suppliers he works with, said Snyder, increased an average of 28 percent between October 2017 and June 2018.
“We saw lots of paper being taken out of the market and because of that supply became tighter,” Snyder said. “The tighter market was not because of demand increase. It was because of a supply decrease.”
Mills “didn’t think they needed it,” Snyder said. “Demand has been steadily going down, probably in the area of 10 percent a year for a number of years.”
Press rooms shutting down, newspaper consolidation and papers cutting back on pages have contributed to the decrease in demand for newsprint, Snyder said.
He noted that other markets for newsprint have been opening around the world.
“India has been a pretty big market,” said Snyder, as have Asia and South America.
Jordan Leighton, a regional sales manager for White Birch Paper, attributed the company’s price increases to supply and demand, rather than tariffs.
“As always, the price that we have has been market-driven,” Leighton said. “We’re not responding to the tariffs.”
Leighton said the company is “about a month and a half out” on its orders, adding, “I’ve never seen it so tight.”
But Snyder says tariffs affected the companies, even if they’re reluctant to admit it.
“They were very careful to not include the tariffs in their price hike,” Snyder said. “I find it hard to believe that there was not some type of effect even though they won’t admit to it,” noting that “those with the lowest tariffs had the least amount of increases.”
The companies have not yet announced whether they will be lowering their prices in response to the decrease in tariffs, said Snyder, but he expects something later this week.
Of course, said Snyder, there’s the bigger issue of the internet to contend with.
“The small-midsize paper is pretty much dependent on print revenue,” Snyder said. “They don’t have the internet markets to replace lost revenue from print.”
Nearly 60 percent of the jobs in the newspaper industry have disappeared over the past 15 years, according to the Bureau of Labor Statistics.
The department’s decision to impose the tariffs was triggered by a petition filed last August by a single paper mill in southwestern Washington. The mill, North Pacific Paper Co., claimed that government-subsidized Canadian newsprint producers were dumping paper below production costs in the United States.
The cost of newsprint skyrocketed around 26.5 percent for The Ellsworth American, according to Publisher Alan Baker. The American buys its paper through PAGE. The cost increase has also been passed on to smaller papers, such as The Bucksport Enterprise and Penobscot Bay Press newspapers printed on The American’s presses.
A final decision on whether to keep the tariffs in place will be made next month by the independent U.S. International Trade Commission.