Posted in: Ablaze Publishing, AfterShock, Ahoy, Antarctic Press, Archie, AWA, Bad Idea, Black Mask Studios, Boom, Comics, Comics Publishers, Current News, Dark Horse Comics, DC Comics, Dynamite, Fantagraphics, IDW, Image, Lev Gleason, Marvel Comics, Oni Press, Opus Comics, Quirk, Rebellion / 2000AD, Titan, Tokyopop, Top Cow, Vault, Viz Media, Yen Press | Tagged: tariff, tax

How 25% Tariff & Taxes Might Affect The American Comic Book Industry

How a 25% tariff or tax might affect the American comic book industry and the stores that sell the comics.

There is some irony that America is celebrating Thanksgiving at a time when they are also planning new trade taxes on importers when the American Revolution was classically started over the rejection of tariffs over tea and a certain Botany Bay. But I am a Brit, so what do I know? Well, I am a political and economics student, and I am known for drawing the odd political cartoon. This makes me at least as qualified as most people pontificating on this subject, especially when it comes to comic books. Tariffs are an effective economic tool of taxation for a state to manage the economy, protecting some areas, correcting poor market behaviour in others, rewarding the purchasing of some goods over others, and playing favourites over what society favours even if the market does not. However, in general, sales taxes and tariffs have the effect of increasing prices and inflation.

Most American comic books are printed in Canada and driven across the border, with a significant amount of graphic novels published in East Asia and shipped in on the boats. Canada's paper stock is cheaper due to an abundance of timber forests, economies of scale and expertise of printers and paper mills. A 25% tariff on comic books shipped from Canadian printers to American distributors such as Diamond and Lunar may not make them more expensive than American printers, who often use Canadian paper anyway, but it will make comics a lot more expensive in stores. A $3.99 comic will now cost $4.99, a $4.99 comic will cost $5.99 or $6.99, and we can say goodbye to Todd McFarlane's $2.99 Spawn line.  Now, comic books are generally an inelastic good, which means that an increase in price will not lead to a commensurate drop in demand, but that inelasticity cannot last forever, and it may reach a point when it snaps. This may be that point. Price points of comics combined with rent increases are the biggest given reason for failing comic book stores, and a 25% increase in prices for comic books may be too much for many to bear. The 10% China tax will mostly affect bigger books that are already pricier, so the resistance to change for, say, an Omnibus being an extra $15, say, will be less.

It may also mark the time that the comic book industry splits the price of print and digital, not passing on the 25% increase to the digital version of a comic book. Which may harm comic book stores even more. Also, it is expected that other countries will make matching tariffs if only to maintain their balance of payments and competitiveness. So if the tariffs extend beyond Canada, Mexico or China, comic book stores that ship overseas may see a drop in demand. Some publishers may decide the global market is more valuable than the US version and establish themself in other territories instead. The other aspect being hit will be crowdfunding, with shipping and printing costs now expected to soar. This will have a greater impact on those already underway in terms of printing and shipping. So what are industry folk saying?

What will 25% tariff and taxes mean to you?

Josh Blaylock, publisher of Devil's Due writes: "Most US comics are printed in Canada & China. Expect the entire comic book industry to take a serious hit if we get Trump tariffs. Based on our industry size ($200M in foreign printing annually?), expect about $25-$40 Million on additional tariff taxes added to publisher costs. To recoup that, pubs need to charge distros more, they need to charge retailers more, and the consumers, in the end, absorb about an extra $100 Million in costs at the counter. Or likely about $500-$600 extra a year in costs for comic shop customers to keep buying the same amount. Very rough math. $2 Billion industry = $800M in wholesale. An estimated 35% of that goes to printing =$280M. Estimate 75% of that printed Canada/China=$210M. Tariffs to be 10-25%=$25M+. From there, work backwards on basic profit margins from publisher to distributor to retailer. These numbers are by no means perfect, but just one example of how comics will be directly affected. For every extra 10¢ price increase, we have to raise retail by 25¢ to recoup.

Nat Gertler, publsher of About Comics: The tariffs are going to hit the comics industry hard. China is the popular spot for cheap printing, and even when there is something printed in North America, it's generally Canada. About Comics will be hit less than most, as we use local Print on Demand. But still, paper costs are apt to rise.

Charles Rozanski, retailer of Mile High Comics, writes, "has been running trucks to the Los Angeles Wholesale Toys District. He writes, "In case you are wondering, I am going bat-**** crazy buying imported toys right now specifically because of the potentially catastrophic impacts of our most recent election. While the proposed 60% tariffs on Chinese-made goods would obviously be crippling in-and-of themselves, what really has me concerned is that I believe that well over half of the workers (and many of the proprietors) of the 500+ small businesses that constitute the Toy District have tenuous (at best) immigration status. If Steven Miller and his brownshirts follow through on his threats and start rounding people up for deportation on day one of the new administration, they could easily collapse the entirety of this awesome little entrepreneurial economy. The destruction will probably not happen all at once, but I was already seeing a substantial diminishment in customer foot traffic in the Toy District, as many of the immigrant store owners who operate the little bodegas along the Mexican border have apparently already curtailed their spending. Sadly, fear is now the order of the day. To quote Joni Mitchell: "You don't know what you got, 'till it's gone… "

Derek Kunsken‬, author:  Canada exports an enormous amount of softwood lumber to the US, which makes paper. Among many things that paper gets used for is printing #books
and #comics products where profit margins are small. The Republican #tariffs could wipe out all but the biggest publishers, plus mos#bookstores

Klaudia, media comentatior: so the trump tariffs are gonna kill western comics right. unless western comics figures out an actual solution to providing digital comics to replace comixology. bc physical manga may also suffer but manga and manhwa have digital distribution on lock

‪Carol Tilley‬, comics creator and professor:  "Pondering what's going to happen to book and comics prices when we've got high tariffs on Chinese goods. I'm not sure what percentage of US books are currently printed there, but it's been significant in years past. May make it more difficult for libraries, esp with already tight budgets."

Regan Clem of Summitt Comics and Games comic store in Indiana writes, "The 25% Canada tariff is definitely scary."

Phil Boyle of Coliseum Of Comics in Florida replied "I expect it's a political tactic to get compliance on the borders. Lot of red tape to cut through due to NAFTA but Trump could do it. I'm unconvinced it will happen Day One. China is another story."

Regan Clem: "Definitely a starting point in negotiations. That's why I've avoided the conversation on multiple industry pages. It's just negotiations at this stage. Sure, a 25% Canadian tariff will impact us. A 10% Chinese tariff would too. But those are the worst-case scenario. He's using those to, hopefully, negotiate something better."

Goats Flying Press‬: To everyone googling "tariffs": Goats Flying Press will never stop print comics! We'll get goats to chew up newspapers & make our own pulp if we have to! As our publisher, who is a savvy business mind and also a handsome bastard often says: "I don't need this to make me money, just comics."

This could all be negotiation tactics, and the US government will have no actual intention of following through with this; rather, it will just use it to put pressure other policies. And, of course, customers could always throw the comics into the harbour bay when they arrive rather than pay the additional 25% tax. I hear you folk have a history with that sort of thing. Happy Thanksgiving Day, all!

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