President Donald Trump’s zeal to put America first, particularly on trade, instead is dealing a financial blow to the already-struggling newspaper and publishing industries, thanks to his Commerce Department’s move to enact punitive tariffs on imports of Canadian newsprint.
The case stems from the complaint of a single U.S. paper mill, Washington-state-based North Pacific Paper Co., owned by a hedge fund that appears to be seeking short-term gains at the expense of others. Unlike some trade disputes, this decision came in the face of opposition not only by U.S. newspapers and publishers, but by other U.S. paper mills, the American Forest and Paper Association and dozens of members of Congress — all of whom said the move will be injurious to U.S. business interests. (Full disclosure: The Star Tribune will be directly affected by the higher duties on newsprint imports.)
The Commerce Department’s decision, released Tuesday, will impose “countervailing duties,” designed to offset perceived unfair subsidies by Canada, to be collected by U.S. Customs officers at the border. Thankfully, officials opted for a tariff significantly below the 50 percent rate sought by North Pacific Paper’s owners, One Rock Capital Partners.
The new duties will range from 4 to 10 percent — still a substantial bite that will be widely felt, since Canada is the world’s largest exporter of the uncoated groundwood paper used to produce newspapers, books and other paper goods, with U.S. imports of $1.27 billion in 2016. And the bite could get bigger. Commerce has yet to announce the results of an antidumping investigation that could produce more penalties. Many small newspapers could be crippled by such punitive tariffs.
Equally troubling is that this is just one of many such actions a newly zealous Commerce Department has taken on behalf of a president who has made the trade imbalance his special whipping post. In releasing their preliminary decision, which still must go before the International Trade Commission, Commerce Department officials noted that “enforcement of U.S. trade law is a prime focus of the Trump administration.”
In some instances, taking a strong stand against countries dumping underpriced products on the U.S. market to undercut American companies is warranted. But care must be taken not to go overboard, as is the case with groundwood paper. The Commerce Department is supposed to watch out for American businesses, not kneecap them to create favorable conditions for a single entity.
The trade actions taken in the past year have struck at some of this country’s most venerable trading partners, from every corner of the globe. Steel wire rods from South Africa, polyester fabric from China, tool chests from Vietnam, mechanical tubing from Germany, plywood from China — all have become targets of a Commerce Department that announces investigations sometimes at the rate of two a day, based on single complaints or no complaints at all.
In another break from past practice, this administration is not waiting for U.S. industries to file complaints, but is opening, in its own grandiose term, “historic, self-initiated” trade investigations. Overall, the Commerce Department has initiated 82 investigations cases in the past year — an increase of 58 percent over the previous year.
The health of American businesses depends heavily on good trade relations around the world. Foreign nations not only supply goods, but are valued and needed customers for U.S. products and services. Too vigorous an enforcement can easily become what Canadian Chamber of Commerce President Perrin Beatty, in describing the newsprint decision, called “a grotesque example of protectionism gone wild.”
Canada is this country’s top export market, and U.S.-Canadian trade totaled $627 billion in 2016, supporting an estimated 1.6 million jobs. Yet it has been singled out by the Trump administration for penalties on its softwood lumber, passenger aircraft and now newsprint. Even before this latest decision, Canada had already filed a complaint with the World Trade Organization on how the U.S. is applying countervailing and antidumping duties. All of this comes as Canada, the U.S. and Mexico head to Montreal later this month for a critical round of talks on what seems an increasingly fragile NAFTA agreement.
Before those meetings, the Trump administration should step back from its all-out enforcement spree to consider the collateral damage it’s causing to American businesses, let alone international trade relations.