~ Chad Friesen, CEO, Friesens Corporation
Like most of the world, we are frustrated by the global trade war initiated by the Trump administration, and we are working hard to protect our employee-owners and customers from it.
As of April 4, our products, and most of our raw materials, are not directly affected by tariffs. However, we’re monitoring three potential tariffs that present varying degrees of impact and likelihood:
| IMPACT | LIKELIHOOD | |
|---|---|---|
| American tariffs on Canadian-made books | HIGH | LOW |
| Canadian counter-tariffs on American-made paper | Medium | Diminishing |
| Canadian counter-tariffs on American-made books | Medium | Diminishing |
Issue # 1 – American Tariffs on Canadian-Made Books
This is the most significant tariff threat for our company, but it is also the least likely to occur.
For now, it appears the Trump administration has backed away from threats of wide-spread tariffs on Canadian products. They have indicated no plans for future tariffs on products covered by the free trade agreement between Canada, the United States, and Mexico (CUSMA).
However, nothing seems certain at this stage. But if new tariffs were announced, our products would still be protected. The Trump administration is using the International Emergency Economic Powers Act (IEEPA) 1977 to impose tariffs. The Act exempts various forms of print, audio, and video materials from the tariffs. The exemptions were added to protect Americans’ First Amendment rights by ensuring the free flow of information.
Under the Harmonized System Code (HSC) for printed books, our shipments would pass through U.S. customs tariff-free. Our American customers also report no tariff issues when importing books from countries that are subject to the IEEPA tariffs.
While there is some speculation about whether the Trump administration might challenge the exemption, we believe it is unlikely as books are low-profile targets and changing the exemption would require congress to undermine First Amendment protections.
We will continue monitoring this threat, but we do consider it mitigated.
Issue # 2 – Canadian Counter-Tariffs on American-Made Paper
While Canada has responded with some counter-tariffs on American-made products, thankfully paper is not included (yet).
However, paper is still listed as a potential tariff-able product in future rounds of Canadian tariffs. Our concern is that a tariff on American-made paper would harm Canadian printers while potentially benefiting American printers. This is the opposite of the intended purpose.
The U.S. is the world’s second-largest paper producer. While Canadian printers can source some paper from other countries; obstacles such as selection, availability and shipping logistics make American-made paper the only option for some projects.
If tariffs were applied, we would be able recoup some of the costs through the CBSA – Duty Drawback Program when American-made paper is used to print books in Canada that are subsequently exported back to the U.S.A. However, the relief program does not apply to American-made paper that is used to print books that remain in Canada. If a Canadian publisher is exporting most of their books to the U.S. anyway (which is common), they may choose to avoid the added expense incurred from tariffs by ordering from an American printer.
A counter-tariff on American-made paper may incentivize Canadian publishers to print in the U.S.A instead of printing in Canada. Therefore, we are urging the Canadian government to remove HSC #4810 and #4802 from Canada’s potential counter-tariff measures.
We will continue advocating but we do consider the risk of tariffs on paper to be “diminishing”.
Issue # 3 – Canadian Counter-Tariffs on American-Made Books
While Canada has responded with some counter-tariffs on American-made products, thankfully books are not included (yet).
However, printed books are still listed as a potential tariff-able product in future rounds of Canadian tariffs. Our concern is that a tariff on American-made books will negatively impact the Canadian publishing market (our customers). Many books sold in Canada are printed in the U.S.A. and distributed from American warehouses.
Books have historically been safeguarded by trade agreements between Canada and the United States, but they are now included on the list of potential counter-tariffs.
This tariff would have both positive and negative implications:
- On the positive side, the tariff would encourage both Canadian and American publishers to print books in Canada (especially books that will be sold here). This benefits us.
- On the negative side, Canada does not have the capacity to print all the books purchased in this country. Thus, forcing publishers to continue importing from the U.S.A., leading to tariffs that will hurt Canadian publishers and/or Canadian book retailers.
- Another potential negative is if this counter-tariff prompts the Trump administration to retaliate and challenge the IEEPA exemption outlined in issue #1. While this is unlikely, it would have major ramifications.
A counter-tariff on American-made books would harm Canadian publishing and will jeopardize the tradition of safeguarding literature from trade duties. Therefore, we are urging the Canadian government to remove HSC #4901 and #4903 from the potential counter-tariff measures.
We will continue advocating but we do consider the risk of tariffs on books to be “diminishing”.
Despite the supposed reprieve, we’re still responding to these threats. Below are the initiatives underway at Friesens to mitigate the impact of this trade war:
- Reassuring employee-owners and customers that Friesens remains steady and reliable
- Reducing the amount of paper we order from the United States
- Increasing inventory levels just in case tariffs take effect
- Advocating to remove paper and books from Canada’s counter-tariff measures
Our team continues to be busy printing and binding for both our Canadian and American customers. We are blessed with great partners that will ‘weather the storm’ with us.
We await a resolution to this nonsense and a return to more normal business conditions for both Canada and our friends in the United States. Until then, we will continue monitoring these issues and mitigate as best we can.
We will get through this together!
