Bad news for newspapers: Trade dispute apt to drive up cost of newsprint
WINNIPEG — As if the US newspaper business didn’t have enough trouble coping with decades of lost readers and advertising dollars, an escalating trade dispute with Canada is poised to make every edition cost a lot more to publish.
Newsprint prices have jumped since October to a three-year high and may keep increasing if, as expected, the Trump administration slaps duties on imported paper from Canada next month. America’s northern neighbor accounts for about three-quarters of what gets used in the United States.
The higher costs will squeeze US newspapers already coping with 28 straight years of declining circulation and increased competition from the Internet. Many publications have closed as print-advertising revenue has plunged 80 percent since 2005. The New York Times Co. alone spent $72 million last year on newsprint, or 5 percent of operating costs. But the biggest impact may be at the hundreds of smaller papers with fewer financial resources.
‘‘It could have a catastrophic impact on community journalism,’’ said Matt Davison, publisher and president of the Idaho Press-Tribune, which publishes six days a week and has a circulation of 15,000 in Nampa, about 20 miles west of Boise.
A metric ton of newsprint in the United States cost $570 as of Dec. 26, according to FOEX Indexes Ltd., a provider of global pulp and paper data. Prices are the highest since December 2014 and are up 4.8 percent since Oct. 3, after the United States began investigating imports of Canadian newsprint.
Prices will probably rise even further in 2018 because it’s ‘‘pretty much a guarantee’’ the United States will impose preliminary countervailing duties of 15 to 25 percent, said Kevin Mason, managing director at Vancouver-based ERA Forest Products Research.
Canada, with its vast forests and timberland, is the world’s biggest maker of newsprint, and the United States is its top customer. But North Pacific Paper Co., of Longview, Wash., filed a trade complaint alleging Canada subsidizes its industry, giving companies like Montreal-based Resolute Forest Products Co. an unfair advantage in preserving a dominant market position.
The US Department of Commerce will announce in January whether it will impose preliminary countervailing duties on Canadian imports of uncoated groundwood paper, used in everything from book publishing to newsprint. It’s the latest dispute between the two countries, which have a growing list of trade spats that includes dairy products and lumber.
If duties are imposed, Canadian newsprint exporters will have to boost prices, causing immediate hardship for smaller US publications that operate on thin margins, said Paul Boyle, senior vice president at the Virginia-based News Media Alliance. The group represents almost 2,000 news organizations.
‘‘It’s a killer,’’ and the pain of higher newsprint costs is compounded by US mills that already are unable to produce enough to meet domestic demand, Boyle said. ‘‘In some cases, you’re going to see smaller newspapers go out of business.’’
A group of more than 1,100 local newspapers was so alarmed about rising newsprint costs that it sent a letter to Commerce Secretary Wilbur Ross this month saying that the market is being upended by just one company, North Pacific Paper. Its trade claim appears to be driven by the ‘‘short-term investment strategies of the company’s hedge fund owners,’’ the newspapers said.