Commodities tariffs, when imposed properly and judiciously, can be a potent weapon for enforcing trade policy and fairness. However, the slightest shift of breeze could turn it against its users, tariffs are fraught with dangers for all sides and should be used sparingly if at all — and only after all other avenues have been exhausted.
While President Trump's ill-considered steel tariffs get a lot of attention, a lesser known tariff poses a serious threat.
Earlier this year, the North Pacific Paper Company in Washington state filed a petition with the Department of Commerce alleging that certain competitive Canadian mills were "dumping" paper in the U.S. at an artificially low price. As a result, the U.S. government slapped a tariff that may ultimately amount to a 32 percent surcharge on those Canadian mills' newsprint — affecting virtually every newspaper in America. This self-created debacle threatens the economic viability of many small- and mid-sized newspapers.
Even if American mills ran at full capacity, they could only supply 60 percent of the nation's newsprint needs. But they don't — in fact, it's more like 20 percent currently. Newspapers in the Northeast, like The Eagle, import all of their newsprint from Canadian mills because their proximity makes sense from a shipping standpoint. The Eagle's suppliers have been certified to be fair traders, so the tariff doesn't apply to them. That said, now that North Pacific Paper has secured its protective tariff from one mill or group of mills, all the others can hike their retail prices accordingly as the law of supply and demand works against the consumer.
Newspapers, considered so essential to the sustenance of a healthy republic that the Founding Fathers protected their freedom to publish in the Constitution, are also commercial businesses. When a commodity essential to their survival, specifically newsprint, takes a larger-than-expected bite out of operating expenses, cuts have to be made elsewhere in the organization. These can include reporters, editors and other personnel involved with tracking down and reporting the news as well as acting as a watchdog on local government. Even the second-highest ranking Republican in the U.S. Senate, John Cornyn of Texas, has lamented that newspapers as a "foundational element of democracy" are being threatened by the newsprint tariff.
While Senator Cornyn's welcome words constitute a refutation of President Trump's "fake news" accusations, they remind us that in small towns across America, costs that can be absorbed by larger metro dailies can become an existential threat to those mom-and-pop local publications that bind the nation's communities together. Due to the nature of their product, not only newspaper companies suffer but so, inevitably, does the public's right to know.
The sad truth in the North Pacific case is that honest negotiations between that company and its Canadian competitors might have resolved their conflict before the Commerce Department deployed its blunt tariff weapon.
However, all the news is not bleak; the Senate is currently considering a bill titled the PRINT Act, which would suspend the newsprint tariffs until a study could be completed as to their potential long-term deleterious effects on the newspaper industry. After that study is completed, the president would be required to review it and determine if such a tariff is in the industry's best interests.
There may have been no intent to injure newspapers — which do not have an ally in the president — in imposing this tariff, but the law of unintended consequences has certainly come into play. Considerable research into the implications of applying specific tariffs must be done before action is taken. That was plainly not the case with the newsprint tariff, and there is no indication it was done in the applying or proposing of other tariffs, either.