Prices of US newspapers are increasing. A trade complaint by a paper company influenced the United States Department of Commerce to set an overall tariff at 6.53% for newsprint imported from Canadian plants. The US newspaper industry relieves heavily on Canadian newsprint, importing $1.6 billion’s worth in 2016. This has amounted up to a 20-30% increase in newsprint prices for the US.
The new tariffs, as a supply determinant, be classified as an increase in the cost of factors of production, as it would cost more to supply an equal quantity of newspapers with added tariffs. This increase in cost decreases supply, shifting the supply curve left. Although Canada is not the sole source of US newspapers, it represents a major portion, and other producers do not have the production capabilities to meet demand; therefore overall US newspaper supply decreases. However, it can be stated that specifically US-based newsprint will see a small increase in supply due to seller’s expectations that the price will rise. Demand, in the short-term, has not changed.
An decrease in overall supply results in an increase in equilibrium price.