A self-inflicted problem

It’s strange but when speaking to farm friends about the Trump Administration, I am somewhat surprised whenever I hear support for our President when the topic turns to tariffs. Hang with me for a little bit, and I’ll try to explain.

Forty years ago Liz and I moved our mobile home from Grant City to call Gallatin our home. We had a dream to own a county seat newspaper. We wanted to raise our family in an attractive, stable farming community.

In many respects our weekly newspaper operation is actually like a farm: long hours, various challenges, and personal satisfaction too often the currency to pocket rather than actual dollars. On this level of business, there’s no substantial payback until you grow old and sell the farm. Being an independent family operation is not the best business model anymore. But if your goal is raising good kids then at least, in my humble opinion, there’s nothing better than farming in the fields or what you can produce on newsprint rolls.

Farming has changed so much these past four decades. So has journalism. New disrupters that squeeze the industry make every ripple of change felt on the small, independent operator. So things once considered far away from local day-to-day operations are now very much in focus.

Before venturing any further, let’s clarify one thing: A tariff is a tax.

So, yes, it surprises me that some of my farm friends defend Trump’s deliberate escalation of international tariffs since farm prices are most likely to take a hit. And I admire my farm friends for that. It strikes me that patriotism still plays above self interest here in the fly-over part of the country we call home.

When Liz and I set up shop here in Gallatin, I never thought international trade would play any important part in this little weekly newspaper operation. I am sensitive to whining about our circumstances while so many farm neighbors seem so determined to carry-on carrying-on. But I feel compelled to speak to one point.

There is at least one difference between the tariffs farmers face and that pending against journalists. Farm tariffs escalate when used against other countries, in retaliation for various “us vs. them” scenarios. The threatening tariff on newsprint is self-inflicted for a narrow self-interest.

Our government responded to a lawsuit by a single paper mill, owned by a New York investment firm, alleging that the Canadian competition was affecting its profits. Last January, the Department of Commerce slapped a tariff on Canadian newsprint, and then hit it again in March.

The International Trade Commission (ITC) has allowed the tax to stay in place while it investigates.

Gallatin Publishing acquires Canadian newsprint by the truckload in doing its business. Most newspaper printers throughout the Midwest do likewise. So, even though it’s not yet confirmed that the tariff will be upheld, the tax is already into play.

For much of this year, American printers have been receiving continual price increases of more than 30% on the paper they use to print their editions. Thus far, GPC has found ways to absorb or delay passing on this cost to its customers despite watching the price on a short ton of newsprint increase from $651 to $739 since January. Prospects to rescind the tax dimmed.

Then earlier this month, some hope. The federal government said the tariffs could be lowered somewhat in September, but that the tax would (only) be about 20%.

This newsprint price increase is very hard for small town newspapers to absorb. We know this personally as publishers of the Gallatin newspaper. GPC prints publications both larger and smaller than our community weekly newspaper but without exception any cost increase will force immediate consequence.
It is the ITC that ultimately decides whether this tariff will continue. An announcement could come this week.

The ITC’s job is to figure out whether the tariff will help U.S. producers. The five U.S. mills certainly face challenges. Like my farmer friends, I endorse changes that protect American interests for a greater good. But the challenges for U.S. newsprint producers come from the fact that most large newspapers have dramatically cut back on paper usage.

There is less demand for newsprint in the U.S., so lower prices have resulted. It is not unfair competition, but natural market forces, while digital editions take over the larger newspaper world that affects the papermakers.

American newspapers have used Canadian paper for more than a century. Even with newsprint demand in decline, it simply isn’t possible in the continental U.S. to make enough newsprint to supply the needs of U.S. newspaper readers.
A tariff to punish Canada won’t create more U.S. papermaking jobs. Larger publications will move faster to digital so they can buy less paper. Smaller ones like mine, will simply shrink. Some may go away entirely, leaving their towns with no local paper.

This tariff on newsprint — or the economic ripples already impacting decisions from just talking about the possibility of a tariff — hurts Gallatin Publishing Company and small newspapers like the North Missourian. As an independent American publishing business that prides itself on putting community first, the problem seems self-inflicted.

Would someone please explain to me what’s patriotic about accepting this new tax initiated by our government against our Canadian neighbors to benefit one American producer?