Editorial: Your local news is under tax attack
U.S. tariffs again made big headlines last week. What readers may not know is that tariffs could kill the writers of those headlines. We're talking about community newspapers.
While recent stories have focused on steel, soybeans and pork — and the potentially devastating effects a U.S.-China trade war would have in the Heartland — a similar battle is underway with our neighbors to the north over a simple, everyday commodity: paper.
There are many grades of paper in the disputed category called uncoated groundwood paper. These include standard newsprint, high bright newsprint, book publishing, directory, printing and writing papers. The scope includes paper that is white, off-white, cream or colored.
To understand what's at stake, you need to understand that there already isn't enough newsprint to meet demand. A stranglehold on Canadian paper will make the situation worse.
Northern Pacific Paper and its owner, the New York hedge fund One Rock Capital Partners, contend that Canadian paper producers violate trade laws in two ways. One, that Canadian mills receive illegal subsidies through such channels as harvesting trees on government land. Second, that they sell paper too cheaply in the U.S. compared to prices for other nations. By the way, the American Forest and Paper Association does not support NORPAC's case.
NORPAC claimed these practices injured its paper mill, triggering an investigation by the U.S. Department of Commerce and the International Trade Commission.
Since U.S. trade laws give U.S. producers the benefit of the doubt, the agencies began assessing duties or taxes against Canadian producers prior to concluding the investigation. This is a rare circumstance in U.S. law when you're guilty until proven innocent. Round 1 tariffs in January ranged from 6.5 to 10 percent. Round 2 in March raised tariffs another 22 percent.
The cash payments being collected every time a paper truck crosses the border sits in escrow accounts. Canadian producers will get it back or have the money gradually applied to any final tariff. NORPAC wants that set at 50 percent.
The investigation likely will conclude in late May. The timeline includes an International Trade Commission July 17 hearing, and a final determination could come in September.
The intermediate tariff already has crippled many industries that use paper. A permanent one would seriously threaten the viability of newspapers, especially the smaller newspapers that play a big role in their communities.
If that happens, local businesses will lose an advertising outlet that brings people into their stores. Community groups will lose the ability to alert the broader public to services, special events and more. No more letters to the editor, urging fellow citizens to act.
"We are painfully aware that some newspapers will not survive this upheaval. For those who do, it will be at the expense of a diminished news mission," said National Newspaper Association President Susan Rowell, publisher of the Lancaster News in South Carolina. "Our readers, customers and community will pay the price, just so NORPAC, one small mill in Washington State, can use trade laws to a very temporary advantage. Long term, we will all lose."
Consider these numbers:
• U.S. mills are running at 97 percent capacity now. Canada provides 75 percent of the U.S. newsprint supply.
• NORPAC employs 260 workers. U.S. newspaper publishing employs more than 175,000 in small and major cities. The commercial printing sector employs another 450,000-plus.
• Almost 91 percent of the Canadian newsprint comes into the northeast and primarily the Midwest (if you're reading this in a physical newspaper, you're holding a piece right now). Only 4.6 percent enters the Pacific Northwest to compete against NORPAC.
Without Canadian paper, many presses will stop — either because they can't afford paper or can't get it. Those at the biggest risk, industry analysts warn, are the smallest papers — those without a growing, viable online presence.
So why not go solely online? Some may try.
The truth is community newspapers currently cannot support digital news products without a print version. The hard copy contains the advertising and subscription revenues that enable local reporters to gather, print and post the news. In other words, without print, there is no online news from the local newspaper.
The pain wouldn't stop there. Job losses at U.S. newspapers would result in more lost work, starting with contracted employees, ink suppliers, fuel producers, equipment manufacturers, office suppliers and, in the case of RiverTown Multimedia, the local post office. We will pay the U.S. Postal Service about $900,000 this year to deliver our newspapers and shoppers, including $60,000 in Dakota County.
Community papers are economic drivers. They also are the gathering and dissemination points for government news, economic and social issues, school activities, the arts and everything in between.
As Rowell of the National Newspaper Association puts it, "Even healthy newspapers are going to have to find ways to absorb a daunting new cost. And who will pay? Everyone who relies on a newspaper to tell the local stories, cover elections, advertise sales, get pictures of the winning touchdown, and cheer the economic development people on in their work of creating new jobs."
Communities need community newspapers, and community newspapers need community members' help.
Contact your U.S. senators and representatives. Urge them to fight this tariff. Remind them that the Commerce Department's mission is to protect the American economy. Eliminating the tens of thousands jobs supported by and tied to newspapers is not the way to do it. And remind lawmakers that a free press is an essential component of this nation and the U.S. Constitution they swore to uphold and protect.