Editorial: Newsprint Tariffs Hit Home

It’s not often that people in the Upper Valley feel the fallout when an East Coast hedge fund buys a West Coast company. That’s about to change, and it’s going to hit Valley News readers right in their morning newspaper.

In 2016, a New York-based hedge fund, One Rock Capital Partners LLC, acquired North Pacific Paper Co., a Washington state manufacturer of newsprint and other paper products. In August 2017, North Pacific Paper found reason to complain to the U.S. Department of Commerce that Canada was unfairly subsidizing its paper industry and asked for protection.

In March, the Commerce Department caught the tariff fever that has gripped Washington and slapped what are known as “countervailing and anti-dumping duties” on newsprint imported from Canada. (It should be noted here that, according to the president’s own Council of Economic Advisers — and contrary to his recent assertions — the U.S. in fact has a trade surplus with Canada.)

The duties on Canadian newsprint imposed by the Commerce Department range as high as 32 percent, according to the News Media Alliance, and have the potential to raise the cost of newsprint by 50 percent. This despite the fact that North Pacific Paper is alone in its complaint and its effort is opposed by the American Forest and Paper Industry.

What, you ask, is the big deal? Just buy American newsprint.

That’s not so easy. As the financial pressures on the newspaper industry have grown, demand for newsprint has declined — it’s down 75 percent since 2000 — and American newsprint mills have either closed or switched to producing more profitable paper products. None have any plans to increase newsprint production.

It was the changing market, in other words, and not unfair trade practices by Canada or its paper mills, that challenged American newsprint producers.

Buoyed by the twin advantages of abundant hydroelectric power and lower shipping costs, Canadian paper producers have been supplying affordable newsprint to U.S. publications — including this one — for years.

The Valley News uses more than 800 metric tons of newsprint each year to produce our daily editions, and 200 more metric tons in our commercial printing operation. In response to the tariffs, our three different Canadian newsprint suppliers have already started raising their prices — they’ll hit $676 per ton on May 1, up from $610 a ton in February.

The bottom line: The basic raw material we use to produce our daily newspaper is already costing us tens of thousands of dollars more a year — and not because of any unfair trade practices, and not because the government is trying to protect jobs or improve the economy. Rather, as the News Media Alliance described it, this effort is “political arbitrage” by a single private investment group — One Rock Capital Partners — which is trying to use the power of the U.S. government to levy what amounts to a tax on community newspapers to boost its own profits.

One Rock claims its scheme will “protect American jobs … and may even serve to create jobs in the U.S. as idled paper machines restart.” That’s a fantasy worthy of another hedge funder — disgraced “Pharma Bro” Martin Shkreli — although we concede it’s the kind of fantasy the Trump administration indulges in all too often.

The fact is, if local and community newspapers are forced to absorb the kind of cost increases One Rock’s greed promises to impose on them, the result will be lost jobs — fewer reporters, photographers and editors to cover the local news you want covered, for example — and lost features, as publishers seek to trim expenses by shrinking the size of their publications and cutting national and international wire service stories, along with columns, comics, puzzles and other syndicated content.

If you believe the work that we and other local newspapers do is essential, not only to your morning routine but also to our communities and our democracy, we’d appreciate it if you’d let your representatives in Congress know that these damaging tariffs must be repealed immediately. Not only are they already hurting us and other newspapers, but they will hurt the readers, advertisers and communities we serve.