China and US tariffs dispute 'painful' for UK publishers

The Publishers Association has asked the UK government to step in over tariffs, as the escalating trade war between America and China begins to affect UK publishers’ bottom lines. 

All books produced in China are being hit by the 15% tariffs, impacting UK gift or children’s publishers in particular. Co-editions sent directly from China to the US, or books printed in China that are later exported from the UK to the US, are being impacted.

Bloomsbury c.e.o. Nigel Newton revealed last week that Bloomsbury had been hit with taxes on around 50 of its titles and “it may get worse before it gets better”. But while Newton sad Bloomsbury was able to take the “small charge... in our stride”, other illustrated publishers have complained they are handing over “real money”, warning that – with further hikes anticipated this December – the tariffs could be a potential “game changer”. 

David Graham, m.d. for Pavilion, which prints colour books for the American market either through co-editions, or increasingly via distribution, told The Bookseller the tariffs were “painful”. With roughly 80% of its business currently going through China, while the US market makes up a fifth of its total business, he reported it had cost Pavilion "a lot of money". The press has now handed over “thousands and thousands of dollars”, up to five figures, in VAT to American customs, he said.

“We are paying the import duty on all the books we are distributing that we print in China and it’s painful," Graham said.

He added that there was alarm at threats of a fresh hike to 25% in December. “We are currently absorbing the cost but if it moved 25% that is a game changer,” he warned. “It’s real money. You think these taxes can be absorbed but we have sent thousands of dollars to US customs and that really sticks in your craw.”

The PA said the trade dispute was having “a real impact on many publishers” who rely upon China for printing and said it has now urged the UK government to step in, arguing such tariffs contravened "international agreements not to place duties on cultural and educational materials".

PA c.e.o. Stephen Lotinga said: “The Publishers Association has raised this matter with the UK government as a matter of great concern. These tariffs are having a real impact on many publishers who rely upon China for printing and are in clear contravention of international agreements not to place duties on cultural and educational materials. More importantly, such measures are short-sighted and only serve to disadvantage readers by inhibiting the free flow of ideas around the globe. We ask that the UK government offers one of our closest allies some friendly words of advice that tariffs on books are not in anyone’s interest.”

Quarto confirmed it likewise is reviewing its print options "like all illustrated publishers", including cutting better deals with Chinese printers where it remains necessary for printing to remain in the country. "Like all illustrated book publishers, Quarto is working on ways to mitigate the effects of the tariffs on the import of books from China into the US. On behalf of its co-edition partners, it is expanding its geographical base of printers and negotiating better deals for printings that need to remain in China," said Quarto's spokesperson, adding: "There is some evidence to support the fact that US publishers are modestly increasing retail prices in order to hang on to margin."

Michael O’Mara said the tariffs had made the process of exporting more time-consuming, and led to the conclusion that licensing may be "the only option" for some sales. Katie Arora, head of US and Canada sales, explained: “The import tariffs have made quoting co-editions difficult: printing outside China is not necessarily the best option for our own list or our other international partners, since it affects schedule, quality and price. Also, trying to accommodate our US distributor and retail accounts when exporting from the UK has proved time-consuming, for example, separating books printed in China from those printing elsewhere.

“Our US customers have made various requests to try and combat and minimise these cost increases, and we have been consulting the Publishers Association on how to proceed. Overall, there are more factors to weigh up and work through on every type of sale and licensing may be the only option in some instances.”

In an effort to mitigate the effects of the trade dispute, Graham said illustrated publishers are now scrambling to move their printing outside of China, partly because of the “administrative headache” that is involved in checking where titles have been sourced so as not to commit a federal offence. “It’s a real headache and a concern,” he said. “There are two issues: one is of administration because one has to be extremely accurate about these things as it is a federal offence to mislead the authorities about where the books are coming from. But not only are we supplying books from the printers, we are also supplying books from our warehouse in the UK from UK stock of which there can be multiple printings, some of which may be from China, some may not. So, when we are drawing on top up stock for our distributor in America, we have to get our warehouse to check which printing they are drawing from. Administratively it is tying us up in a huge amount of red tape.”

The extra work involved has also affected the business’s relationships with co-edition partners, he said, because of “a lack of clarity” around the new measures.  He said: “It is impacting on our relationships with co-edition partners as to who is to pay and what percentage it is based on as there is a lack of clarity as to whether that is the simple line costs or plant costs or royalty costs or what; exactly what the 15% is applied to is opaque and changing all the time.”

Graham said Pavilion was now looking “all over, far and wide” for alternatives when it came to printing, but it was not straight-forward to find an option where the cost isn’t as great as the Chinese cost with the tax would be. “China would be our first choice," he said. "However, we are now seeking alternative sources, because it makes life a lot simpler. Trying to remember and track the country of origin, there’s a direct cost but there is also administrative headache of remembering where printings have come from. But there is limited capacity outside of China for everyone to switch and for it not to affect print prices.”