Corner Brook mill reliving 2018 U.S. tariffs, but in better position to weather the storm

CBC

30-01-2025

In the face of the continuous threat of U.S. tariffs on Canadian goods, a paper mill on Newfoundland's west coast is looking at a redux from seven years ago when tariffs were slapped on its newsprint.
However, advocates say the situation will be different this time around.
This isn't the first time the Kruger-owned Corner Brook Pulp & Paper has faced down tariffs implemented by U.S. President Donald Trump. In 2018 the mill was hit with an export duty of 9.93 per cent on groundwood paper, followed by a 22 per cent anti-dumping duty, for a combined 32 per cent.
Kruger stood to lose about $30 million a year, though the tariff was eventually overturned. But as a result, the company began to look away from selling south of the border and instead to markets in India to avoid fees.
Kruger spokesperson Marie-Claude Tremblay refused an interview request from CBC News on how the company could be impacted in the latest round of tariffs, which could be implemented as early as Saturday.
The 2024 provincial budget gives a peak at Kruger's west coast operation and who the company now sells to.
"India overtook the United States as the top export market in 2023. Together, the two countries accounted for 42.9 per cent of international newsprint exports from the province," it reads.
According to the province, the paper also was shipped to countries like Mexico, the United Kingdom, Israel and Taiwan.
Fighting the 2018 tariffs cost the provincial government at least $500,000 in legal fees.
It was around the same time Kruger was dealing with the hit from U.S. export duties that it began planning to sell its newsprint to India.
"It's no doubt the U.S. tariffs have had an impact on our industry and on our business. What you see here is us expanding to the export markets," said Darren Pelley, vice-president and general manager of Corner Brook Pulp and Paper in an interview in 2018.
"In the beginning of the year we were about 65 per cent to the U.S. That is reducing as we move into the export markets. We project by the summer to be lower than 40 per cent."
Need to diversify
Greater Corner Brook Board of Trade past president Keith Goulding said Kruger realized a lesson from 2018 about relying too heavily on the U.S.
"I think that everybody is starting to recognize over the past few years that diversity in the market is what's needed. So we're starting to see a lot of diversification here in Corner Brook," he said.
While that diversification has started, he said the U.S. remains a big market for Newfoundland and Labrador goods like seafood. Beyond looking past the U.S. for trade, Goulding said he'd like to see more trade between provinces.
"I think it's high time for that made in Canada style approach and to look at how we can increase our manufacturing and increase our export from the province of Newfoundland and Labrador and bring it to other provinces in Canada," said Goulding.
There also needs to be short-term mitigation measures in place to combat any tariffs that come into effect, he added, while also having an eye to long-term measures to ensure U.S. tariffs aren't a threat in the future.
"Very quickly we need to pivot and look at — what are we doing in the next three, five to 10 years to make it so we don't fall into this trap again?"
Goulding said there could be a ripple effect in the Corner Brook economy if tariffs are imposed.
"The tariff war can have a trickle down and knock on effects that are going to be felt in a number of sectors," he said.
This will pass
Corner Brook Mayor Jim Parsons says people worry anytime there is market pressure that could hurt the mill, but added that Kruger was able to navigate the tariff situation before.
"They were overcome. And I think likewise this too shall pass," Parsons told CBC News.
"It will cause us some, maybe some short-term hiccups here and there, but I think [in] the long-term that we'll have a plan to address this."
While the initial existence of Corner Brook was centred around the mill, Parsons said the town's largest employer is the hospital as well as other government services, so the town has a diverse economic base.
Parsons added that Newfoundland and Labrador has products that the U.S. needs, like newsprint and fish.