Comics Industry Dodges the Tariff Bullet – For Now – But It Could Be a Killer

Did you know there’s a trade war going on with paper and tariffs?  There is and the comics industry needs to start paying attention to it.  An awful lot of comics are printed outside the United States.  Canada and China being the major trade partners here.  A lot of the paper used for printing comics inside the U.S. may well also come from Canada.

Here’s what’s happened, courtesy of the Tampa Bay Times:

This month, the U.S. government piled huge tariffs onto the imports of newsprint from Canada, including those from our biggest supplier. As a result, the price will jump from $600 to $800 for every ton, and we use about 17,000 tons every year.

That increase is more than 30 percent, and would add more than $3 million to the Tampa Bay Times’ annual newsprint bill.

The Aiken Standard agrees on the cost hike per ton, but has a lower percentage gain:

The tariffs began this month and are being collected at the border. It’s an increase of $600 to $800 per ton. May not seem like much, but for us here in Aiken it may mean an increase of 22 percent in costs.

The Wilson Times is going with 32% passed on straight:

The U.S. Department of Commerce has tagged Canadian paper imports with tariffs of up to 32 percent that will make the newsprint you’re reading a lot costlier for us to buy. Canada supplies the majority of paper stock that’s used to produce American newspapers, including your Wilson Times. Paper mills don’t absorb that import tax; they pass it along to their customers.

30% is a pretty large price increase.  That’s potentially crippling to a newspaper.  This is what the Tampa Bay Times is looking at:

These tariffs will hurt our readers, because they create pressure to raise our prices, and they will force publishers to re-examine every other expense. Maybe we will drop some puzzles and comics — no big deal, unless we cut one that is your favorite.

These tariffs will also hurt our employees, because payroll is the only expense that is bigger than newsprint. To help offset the extra expense of paper, publishers will eliminate jobs. Make no mistake: These tariffs will cause layoffs across American newspapers, including this one.

Shots fired on comic strips right there.  And comics industry professionals should be very familiar with “right sizing” a publisher’s staffing levels to make them more in line with revenue and expected profit margins.  These are things we have heard before.  So why haven’t the comics publishers been panicking?

Right now, the tariff is on newsprint.  Specifically, it’s on what they’re calling “uncoated groundwood paper.”  Most comics aren’t printed on newsprint anymore.  It’s almost all coated paper.  So for the moment, most of comics is dodging the damage this tariff is poised to cause the newspaper industry.  Well, unless you have a comic strip that’s on the chopping block because of this.

But it gets worse.  Some folks in the newspaper industry think there are even loftier price hikes being contemplated:

One small paper mill in Washington State is trying to use the federal trade and tariff laws to make this paper — newsprint, or uncoated groundwood paper, in paper parlance — about 50 percent more expensive. This mill has complained to the U.S. Department of Commerce and International Trade Commission about international competition. If it succeeds, the prices of newspaper printing will skyrocket.

The Aiken Standard puts a name to the same accusation:

Now newspapers around the U.S. are being hit from another angle as a paper mill — North Pacific Paper Company (NORPAC) — in Washington State is attempting to get behind federal trade and tariff laws to make newspaper about 50 percent more expensive. The mill has complained to the U.S. Department of Commerce and the International Trade Commission about international competition. Newspaper printing costs will skyrocket.

And that’s where we stand right now.  In a political atmosphere where there’s plentiful talk of winning trade wars, all it would take to upset the comic book industry apple cart would be expanding the paper grade or perhaps expanding the countries on the tariff list.  Hopefully that doesn’t happen, but this is a situation that needs an eye kept on it, least things escalate.

A lot of publishers, particularly the smaller ones, operate on thin margins.  Would the consumers be willing to absorb a 30% increase in paper costs getting passed on to them?  It’s something everyone would prefer not to find out.

Want to learn more about how comics publishing and digital comics work?  Try Todd’s book, Economics of Digital Comics