As a film reviewer at the Tampa Bay Times for 25 years, Steve Persall had a front-row seat to the winding melodrama of layoffs, buyouts and closures in the American newspaper industry. He’d kept his job through the Great Recession, the shift from print to online and consolidation after the Times bought the Tampa Tribune in 2016.
Newsprint tariffs were a plot twist.
“I hadn’t thought about that and I don’t think anyone else had either,” said Persall.
In March, Paul Tash, the paper’s CEO, announced that new tariffs on Canadian newsprint were a “kick in the teeth” that would mean personnel cuts to make up the roughly $3.4 million in added costs.
Last month, Persall was one of approximately 50 layoffs that Times management told the Tampa Bay Business Journal were a direct result of surprising new tariffs that publishers and printers worry might cripple their industry.
Persall is one of the most recent casualties of an on-going trade war with Canada, a result of complex and long-running disputes between long-time allies with extremely integrated economies. Though proposed tariffs and counter-tariffs between the United States and China have dominated recent headlines, duties levied by the U.S. Department of Commerce on Canadian lumber have had a significant impact on the American housing market for over a year and newsprint tariffs now look poised to further wound an already-struggling printing industry.
The tariffs are just one element of trade tensions between the two long-term allies that have worsened since President Trump’s inauguration. With renegotiations on the North American Free Trade Agreement (NAFTA) under way, the Trump administration has used renewed tariffs on lumber, new tariffs on newsprint and the threat of tariffs on steel and aluminum to strengthen the administration’s bargaining position.
The U.S. Commerce Department announced preliminary tariffs on newsprint in January and March after being petitioned by a single paper manufacturer, the North Pacific Paper Company or NORPAC, in Longview, Washington. NORPAC’s petition alleged that Canadian paper industry benefited from unfair subsidies and dumped its product onto the American market at unreasonably low prices.
“This decision is an important step forward for American producers, workers and their families that have been the victims of unfair Canadian trade practices for too long,” said NORPAC CEO Craig Anneberg in a statement released after the Commerce Department’s decision.
Earlier this month, NORPAC announced that it will restart one of its idled paper machines and hire 50 new full-time and part-time employees, claiming in a statement that “market conditions have improved slightly for the domestic uncoated groundwood papers industry in the face of unfair trade from Canada.”
While the tariffs may have helped NORPAC, they are not supported by other paper companies. The American Forest and Paper Association, the paper sector’s trade association, has come out against the tariffs and many of the other surviving American newsprint mills are owned by Canadian companies. A coalition of printers, newspapers and other paper producers has formed a coalition called Stop Tariffs On Printers & Publishers (STOPP).
Earlier this week, a bipartisan group of 10 senators introduced legislation to delay the tariffs’ implementation. The Protecting Rational Incentives in Newsprint Trade Act of 2018 (PRINT Act) would mandate that the Department of Commerce undertake a longer-term study of their impacts on the newspaper industry.
The industry already faces steep economic headwinds. Last month, the Sacramento Bee laid off 15 journalists and the Chicago Sun-Times published a desperate appeal for online subscribers. The Salt Lake Tribune announced last week that it will be laying off one-third of its newsroom and will only publish its local news section three days a week.
Only the Tampa Bay Times layoffs were expressly linked to the tariffs, but the industry is fearful of the tariffs’ impact moving forward.
“We did a survey where basically 70 percent of newspapers responding said they’re basically going to take cost-cutting measures as a response to the tariffs,” said Paul Boyle, senior vice president for government affairs at the News Media Alliance, a trade association for the industry. “They’re exploring different things like laying off workers, reducing the page numbers, cutting back the width of the newspaper for smaller papers, but everyone is looking at ways to reduce consumption.”
Quad/Graphics, a transnational commercial printing outfit headquartered in Sussex, Wisconsin, has around 20,000 employees at 57 locations across the United States. It prints ads and inserts for print media. Its commercial printing customers purchase roughly 500,000 tons of newsprint—also called uncoated groundwood—each year from NORPAC and other producers. Newsprint is the lowest grade of paper stock, used for newspapers, ads and other retail inserts, directories and airport paperbacks.
“We’re looking at a $15 million increase in costs for no added benefit,” said Pat Henderson, Quad Graphics’ director of government affairs.
“If newspapers can’t afford the increase, they may take it from a daily to a weekly or make it smaller,” he said. “It becomes a death spiral for them. Reducing days means fewer inserts, which means ad revenues decline, which means cutting costs. Every time you cut costs, you cut revenues and at some point you say, ‘We can’t do this anymore.’”
“So not only do we pay a higher price for the product but we’re losing the delivery mechanism,” said Henderson.
About 28 percent of Quad Graphics’ total output uses newsprint, which accounts for about 3,000 jobs within the company’s total workforce. Some of those jobs are at Quad Graphics’ retail insert plant in Tampa, where it prints ads and inserts for the Tampa Bay Times, among others.
The market for newsprint is a regional one. Advertisers need their inserts, ads and coupons to get to readers in conjunction with the sales, products and events they’re promoting, and the industry depends on quick access to its suppliers.
NORPAC’s single mill in Washington competes largely with other mills on the West Coast, while 91 percent of Canada’s newsprint exports entered through the Northeast and the Midwest. Even with NORPAC’s planned increases to production, shipping paper produced in the Northwest to printers in the Midwest and East Coast is cost-prohibitive.
“It’s a very regionalized marketplace,” said Henderson. “You can’t economically get paper from Washington to plants on the East Coast that do this work.”
If the past is any indication, tariffs are likely to be reduced or resolved—either by international adjudication or by a negotiated settlement. The U.S. International Trade Commission is still investigating and has a hearing scheduled for July 17, and the Department of Commerce is scheduled to make a final determination on tariffs on August 2.
But for a newspaper industry already struggling to keep the presses running, even the tariffs’ eventual rescindment won’t save those in the print and publishing industries who have to adjust to drastic short-term price increases.
Stories like Persall’s will likely be more common in the coming months, even if the tariffs are eventually rescinded.
After 41 years in the newspaper business, he is excited to curate a monthly series of Western movies, screening at a local museum and plans to teach at a local university. He is moving on.
Quad Graphics’ Henderson worries that newspapers will move on with him, forced to transition from print to digital by even temporary cost increases.
“We’re shifting to try and say ‘Stay in print,’” he said. “But once they leave, it’s hard to get them back.”
Top photo: Sean Davis/flickr, used with Creative Commons license.