Small-town papers can’t afford steep new tax
Last week, the U.S. Department of Commerce released a rather dry statement about an “affirmative preliminary antidumping duty determination on uncoated groundwood paper from Canada.”
But behind the bureaucratic jargon was a dramatic announcement: The federal government was declaring a more than 22 percent tariff (that is, a tax) on certain types of Canadian paper. The targets include the newsprint used by the Powell Tribune and papers all across the United States.
These tariffs come on top of others assessed by the department in January that averaged about 6.5 percent.
In short, within the span of two months, the federal government has imposed more than 28 percent worth of new taxes on Canadian paper, which, according to the Columbia Journalism Review, is used by roughly 75 percent of American newspapers.
Of course, those taxes will be passed directly to customers like the Tribune, where we expect to face $10,000-$15,000 of added expenses just this year. It will damage this business and almost certainly mean cutbacks.
As a rationale for the dramatic tax hike, the powers that be at the Department of Commerce contend Canadian paper is unfairly subsidized by lower cost electricity and other factors.
“President Trump made it clear from the beginning that we will vigorously administer our trade laws to provide U.S. industry with relief from unfair trade practices,” Secretary of Commerce Wilbur Ross said in a statement.
The way that Ross frames it, the new taxes almost sound good.
But the fact is these tariffs will damage our country and lead to lost American jobs — most likely including positions at newspapers in Wyoming. Some papers around the country may be forced to shut their doors.
This whole dispute — and millions of dollars of new taxes — stem from the complaints of a single company in Longview, Washington: the North Pacific Paper Corporation (NORPAC). The paper company was acquired by a New York City-based hedge fund called One Rock Capital Partners in the fall of 2016. Dissatisfied with NORPAC’s profits, One Rock cut workers’ wages and benefits, shuttered a paper machine and laid off employees in 2017, according to reporting in The Daily News in Longview.
NORPAC is a relatively small operation, with about 260 workers, CNNMoney reported in January. For context, although they’re Canadian companies, Resolute Forest Products and Catalyst Paper, employ roughly 2,900 Americans between them, CNNMoney said.
The figures illustrate a plain fact about today’s economy: it is global, complex and interconnected. When you target a “Canadian” company, you’re almost certain to hurt Americans along the way.
As Canada’s Minister of Foreign Affairs Chrystia Freeland and Minister of Natural Resources Jim Carr said in a joint statement last week, “Any duties will have a direct and negative impact on U.S. newspapers, especially those in small cities and towns, and result in job losses in the American printing sector.”
It’s baffling that the Canadian government appears to care more about our jobs than our own U.S. government.
Here in America, we generally subscribe to capitalism — the belief that private businesses should control trade and industry — and believe in free markets that have as little government intervention as possible.
A tariff is a disruption of those ideals; it’s the government deciding that it needs to step in and manipulate the market.
That’s why it’s strange that President Trump’s Department of Commerce bragged in last week’s announcement that it’s initiated 96 percent more “antidumping and countervailing duty investigations” than the Obama administration did in the same period of time. Since when did meddling with trade — effectively picking winners and losers — become a good thing?
In the case of the paper tariffs, the Trump administration is poised to disrupt decades-long business relationships between newspapers and their paper suppliers in Canada. The Tribune has been purchasing paper from Canadian suppliers for as long as anyone here can remember — a span of over 60 years. The Tribune has partnered with Alberta Newsprint Co. for decades.
Certainly, tariffs have their place, such when a foreign government is truly propping up an industry and giving it an unfair advantage.
But in the case of the recent paper tariffs, it appears the only truly unfair advantage is the one that the Department of Commerce wants to try giving to NORPAC.
“Try” is the operative word, because there’s little reason to think the tariffs will actually give the company a boost.
The thinking of NORPAC’s hedge fund owners in New York City and of the commerce department bureaucrats in Washington, D.C., apparently goes that, if the price of Canadian newsprint goes up and is priced similarly to NORPAC’s, newspapers will come crawling back to NORPAC with their business.
But that mistakenly assumes demand for newsprint will remain constant while the price spikes.
For the small-town newspapers that survive — and in some places, that won’t be a given — the higher expenses will instead force embattled publications to cut back further; already, the Tribune has discussed significant changes.
The president and Republicans in Congress have given themselves plenty of pats on the back for cutting taxes and reducing the burdens on America’s small businesses, but these paper tariffs undercut those accomplishments. It’s a massive new tax that interferes with private business and disproportionately punishes rural America.
We implore our Congressional delegation — U.S. Sens. Mike Enzi and John Barrasso and U.S. Rep. Liz Cheney — to work with President Trump to reverse these job-killing tariffs.