The US Trade Administration issued a notice in the third week of May 2019 that all printed materials from China would be included in the list of $300 million worth of imports facing a 25% tariff due to failing negotiations between the USTR and China. With the due date of June 10th to resolve the issue having long since passed, publishers, authors, and booksellers have been left to speculate as to what the next steps will entail. Still others have been completely blindsided, wondering how we got here in the first place. 

The USTR has threatened China with trade tariffs since January of 2018, beginning with a 30-50% tariff on solar panels and washing machines. This was quickly followed by tariffs on imports of steel and aluminum in March 2018, tariffs on US allies such as Canada in June 2018, and finally the 25% tariff on 818 categories of goods imported from China in July 2018. The proposal of these tariffs has caused the countries targeted to respond in kind with tariffs on imports from the US, resulting in a veritable trade war. The USTR argues that the tariffs against Chinese imports are in opposition to the unfair trade of technology and intellectual property by China.

Publishing remained out of the cross fire until May of 2019, when printed goods were included on an additional tariff of goods known as the List 4. While a slim percentage of printing has returned to North America, the bulk of printed materials for sale in the US are still being made in China. But why can’t this be done in the US? The answer is simple: North America does not have the technology or the job training to handle the work of the Chinese printing industry. Specifically, China holds the key to working with ultrathin paper, as well as four color processing, and board books which are waterproof, chewproof, and non-toxic. These aspects are vital to the Bible industry, as well as children’s books here in the United States.

Madelline McIntosh, CEO of Penguin Random House, explained these issues in her testimony to the USTR, stating that “We use Chinese printers for a very specific kind of printing. Eighty-two percent of the books we print in China are children’s picture, preschool, and board books… The remaining books are full color adult books with illustrations, including cookbooks, art and photography books, reference, and instruction books.” Popular titles mentioned in her testimony are “Pat the Bunny,” “the Hungry Hungry Caterpillar,” and George W. Bush’s “Portraits of Courage.” 

While this is only a quarter of the books published by PRH, the exact amount printed by China for this publishing house alone is 94 million units. McIntosh urged the USTR to understand, “that printing volume cannot move elsewhere in any foreseeable timeframe. There simply is not enough capacity outside of China to handle all the printing that we alone do in China.”

To put that number into perspective, 94 million units represents just one quarter of books ordered by one of the Big Five houses of traditional publishing. Continue to factor in the hundreds of indie publishing houses, and the books ordered by millions of self-pub authors, and 94 million units becomes just a small slice of the Chinese printing industry. 

The tariff of 25% on books printed in China for US publishing would not be paid by the Chinese government, but would be paid by those who’ve ordered the books to be made here in the US. That means a massive increase in expenses for US publishing houses and indie authors. The fallout from which would not only affect the publishing industry and its customers, but charity programs whose sole purpose is to promote literacy in America’s youth by way of donated books for children. Charity programs such as Raising A Reader and First Book might cease to exist due to the buffer, which allows them to afford books, vanishing in the wake of the List 4 tariffs. McIntosh explains, “these programs purchase their books at high discount rates that leave no room to buffer a twenty-five percent increase in cost. This tariff poses the greatest threat to the vitality of these programs that some of them have ever faced… Underprivileged and underserved communities will be the hardest hit.”

CEO Madelline McIntosh of PRH was one of a number of distinguished members of the publishing industry to testify before the USTR in support of the removal of printed goods from the List 4 tariffs. The International Book Publishers Association reiterated claims made by PRH that the US does not have the means to accomplish the same work of the Chinese printing industry.  The American Booksellers Association Board President James Fiocco also testified to the long term effects on independent bookstores, many of which would likely close. A 25% tariff would both force customers and booksellers to pay higher prices on books, which neither group can afford to do. 

Books have been exempted from tariffs between the Chinese printing industry and their export to the US due to the simple fact that publishing is unlike any other industry. Whereas previous industries now under increased tariff, such as aluminum and solar panels, can recoup the cost, publishing has no such room for these expenses. Prices of paper and printing are firmly controlled (made worse by the current paper shortage) and must stay low to keep the cost of books affordable for customers. Unlike the price of gas, the consumers of books will not tolerate the cost of a book rising year after year. This would create a drop in sales, which would create a catch-22 as the publishing industry struggles to make more money to pay for a 25% tariff on printed goods, without losing its valued readers. In putting American industry first, the USTR stands to put literacy last. 

For now, the List 4 tariffs have been suspended pending future trade talks. As of July 16th 2019, the talks have been reported by the Chinese as going “in reverse.” The head of China’s Evercore ISI research team was quoted as saying, “The two sides are further apart now than in Nov-Dec 2018.” Trump has threatened China with an additional $325 million in tariffs, while China is demanding the USTR strike a deal as soon as possible.

As of July 17th 2018, no removal of printed materials from the USTR List 4 tariffs has been made. 

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