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Trump’s commerce department put a tariff on Canadian paper that jacked up all U.S. newsprint prices

The ripple effect started with One Rock Capital, a New York private equity firm that bought a paper mill in Longview, Wash., and then petitioned the Commerce Department for tariffs. Now, newspapers around the U.S. have begun layoffs.

U.S. Secretary of Commerce Wilbur Ross speaks at the National Press Club Headliners Luncheon in Washington, D.C., on Monday, May 14, 2018. (Cheriss May/Sipa USA/TNS)
U.S. Secretary of Commerce Wilbur Ross speaks at the National Press Club Headliners Luncheon in Washington, D.C., on Monday, May 14, 2018. (Cheriss May/Sipa USA/TNS)Read moreCheriss May/Sipa USA/TNS

A single tariff benefiting one paper factory in Washington state could prompt the loss of thousands of U.S. newspaper jobs, industry executives say.

The ripple effect started with One Rock Capital Partners, a New York private equity firm that bought a paper mill in Longview, Wash., and then petitioned the Trump commerce department for tariffs against Canadian paper. That one mill employs about 250 people.

The result? The equity firm won punishing newsprint tariffs that have pushed up newsprint prices by about 30 percent. Already newspapers around the U.S. have begun making thousands of layoffs, according to the News Media Alliance, a trade group.

Nearly 50 newspaper executives will meet in Washington D.C. on June 13 and 14 with policymakers regarding the paper mill's tariff request. Those lawmakers will then testify at an International Trade Commission hearing on July 17. The Commerce Department is scheduled later this summer to decide whether to make the tariff permanent or to scrap it.

"Like every newsroom in America, we're deeply concerned about the soaring cost of newsprint. The fact that we publish two daily newspapers makes it even more urgent for us," said Stan Wischnowski, executive editor of Philadelphia Media Network, which publishes the Philadelphia Inquirer, the Daily News and, and is a member of the Pennsylvania NewsMedia Association board of directors, which represents 76 dailies and over 150 non-daily papers across the state. "Our hope is that this issue gets resolved at the federal level this summer so we can minimize the harm to our readers."

The Trump administration imposed levies on newsprint from Canada, which produces about 60 percent of all newsprint. Most Canadian imports of paper go to the Midwest and northeastern regions of the U.S., said Paul Boyle, senior vice president of public policy at the News Media Alliance.

"The one mill and the private equity firm are not supported in their efforts by any other U.S. paper mills or the American Forest and Paper Association," he added.

Their request for a tariff hasn't been joined by any other U.S. paper producers. Canadian mills are the primary source of what's called uncoated groundwood paper — newsprint's formal name — for U.S. newspapers and commercial printers.

"The effect of those tariffs has already been to raise the cost of newsprint significantly," the Boston Globe wrote in a recent editorial. "That affects newspapers across the country; after labor costs, newsprint is generally their second highest expense. U.S. Sen. Angus King, independent of Maine, says the work his office has done suggests the Trump tariffs will increase production costs for newspapers between 20 and 30 percent."

Already, newspapers such as the Tampa Bay Times have had to lay off staff to make up for higher newsprint costs. The Times announced April 18 that it will lay off about 50 employees, responding to what it says is a potential $3 million annual cost increase.

The tariffs resulted from a complaint by a single U.S. paper manufacturer, North Pacific Paper Co. (Norpac) of Longview, Wash. It alleged that government subsidies given to Canadian producers gave them an unfair price advantage over U.S. domestic mills. Canada has about 25 producers while only five operate in the U.S., according to the Pittsburgh Post-Gazette.

In response to the mill's petition, the U.S. Commerce Department in January imposed a tariff of 6.2 percent on Canadian newsprint and raised it by 22 percent more in March.

Commerce's "preliminary decision allows U.S. producers to receive relief from the market-distorting effects of potential government subsidies while taking into account the need to keep groundwood paper prices affordable for domestic consumers," Secretary of Commerce Wilbur Ross said in a statement. "The Department of Commerce will continue to evaluate and verify the accuracy of this preliminary determination while standing up for the American business and worker."

The plant's owner, One Rock Capital, "may be using the petitions as a means of increasing the short-term value of this one mill, without any regard for the dramatic negative implications for U.S. newspapers in thousands of small cities and towns," the News Media Alliance wrote in a letter to Ross.

One Rock Capital did not respond to requests for comment. In a press release, U.S. Sen. Bob Casey (D., Pa.) wrote to Ross, asking that the tariffs be suspended, his office said in a statement.

"Local newspapers and a free press are a bedrock of our democracy and they must have the resources available to faithfully report and transmit the news," Casey wrote. "I have heard from numerous newspapers in Pennsylvania expressing concern about the impacts of Commerce's preliminary findings and I spoke directly with Secretary Ross to share those concerns. I have asked that he use his authorities under the Tariff Act of 1930 to initiate a suspension agreement to reach a swift resolution to this matter."

Pennsylvania's U.S. Senators Casey and Pat Toomey have differing ideas about resolving the tariff: Toomey endorses a Senate-backed bill that would need to be passed by the house and signed by the president, while Casey supports an action coming directly from the Commerce Department.

The Washington state mill was bought out by One Rock Capital in 2016. One Rock then petitioned the Commerce Department to deploy federal trade and tariff laws to make newsprint as much as 32 percent more expensive per metric ton.

For the Inquirer and Daily News, the tariff represents an extra $2 million in costs on an annual basis, publisher Terrance C.Z. Egger said.

"For an industry already severely challenged, this is very painful, unfair, and totally unnecessary," Egger said.

The News Media Alliance, whose members represent more than 1,350 U.S. newspapers including The New York Times and The Washington Post, has sought unsuccessfully to have the U.S. International Trade Commission dismiss the paper mill's case. The commission issued a preliminary ruling in September that the U.S. groundwood industry is being injured by Canadian shipments, clearing the way for the Commerce Department to continue its investigation.

The one mill in Longview, Wash., employs about 250 people, compared with more than 600,000 newspaper publishing and commercial printing jobs at various locations across the United States, according to The Globe and Mail.