Kevin Mason
The incoming U.S. administration has highlighted that it will impose tariffs on friends and foes alike. The application and size of any potential tariffs are unknown, leaving countries and companies guessing about how to position themselves. First-order impacts will be greatest on partners with few alternatives (i.e., Canadian lumber production). Second-order effects are always harder to forecast, but, if Asian paper imports turn away from the U.S., they are likely to flood Europe and/or traditional U.S. export markets. Retaliatory tariffs are to be expected, with the greatest risks to products dependent on export markets, including fluff, dissolving pulp and pellets.
Leaving aside the inevitable unknown unknowns, there are several known economic drivers in the year ahead. Interest rates are expected to decline in 2025, although expectations for the pace of declines keeps changing. Lower rates should increase U.S. housing activity, and even a small increase in activity should have an outsized impact on solid wood and housing markets (as labour allows). The U.S. dollar is expected to strengthen, putting downward pressure on commodities. The U.S. is expected to impose steep tariffs on imports—particularly those coming from China, but also from other countries. This will reshape trade flows over the next few years and should boost domestic manufacturing (although the last go-around showed little benefit). The Chinese real estate conundrum is too deep to be solved in 2025 and will continue to be a drag on confidence, consumption and credit within China and beyond its borders.
VANCOUVER — Conifex Timber announced that it has amended and restated its existing credit agreement with PenderFund Capital Management Ltd. The restated agreement increases the aggregate principal amount of the secured term loan provided thereunder to up to $41 million, of which $5 million is available immediately, and the remaining $11 million is subject to completion of financial diligence. …“The additional borrowings will be used to fund a build-up in sawlog inventories to support our transition to a two-shift operation at our sawmill complex, effective January 6, 2025,” commented Conifex’s Chairman and CEO, Ken Shields. The decision to move to a two-shift operation was based on a steadily improving backdrop for lumber prices, as evidenced by the 18% improvement in cash prices for Spruce Pine Fir benchmark lumber prices in the fourth quarter of 2024 relative to those in the third quarter of 2024. 
…Washington argues stumpage fees are too low and give Canadian loggers a competitive advantage over U.S. producers, which harvest timber largely from private lands and bid against each other for the privilege. The U.S. Department of Commerce is expected to release its next preliminary duty rates on lumber in early May, or 90 days later than originally planned. Its sixth administrative review is based on lumber markets in 2023, when prices were low. Analysts say U.S. duty rates imposed on Canadian softwood could double in 2025 and reach nearly 30 per cent. …U.S.-headquartered lumber producers and timberland owners who complained about Canadian softwood ended up receiving 10 per cent of the US$5-billion in softwood duties paid in the previous round of the dispute, from 2001 to 2006. Canadian companies recouped 80 per cent of the funds while 9 per cent went to “meritorious initiatives” in the U.S., with the remaining 1 per cent allocated to promoting lumber in both countries. Vancouver-based forestry analyst Russ Taylor said, it’s unclear how much Canada will recover in U.S. duties already paid since 2017. [A Globe and Mail subscription is required to read this article in full]
The B.C. government has appointed a new chair and three new directors to the BC Hydro board of directors. …Glen Clark has been appointed the new chair of the BC Hydro board of directors. Clark will take over the post from current chair, Lori Wanamaker, whose term will end on Dec. 31, 2024. …Merran Smith is president of New Economy Canada and brings award-winning leadership uniting industry, government and civil-society partners. …Brynn Bourke is executive director of the BC Building Trades (BCBT). …Don Kayne is president and CEO of Canfor Corporation, and former CEO of Canfor Pulp Products Inc. Kayne has deep experience in international sales and marketing, human resources and executive compensation through 45 years with the forest company. 
Donald Trump talked about using tariffs as a means to increase American manufacturing. …One important economic aspect surrounding these tariffs centers on their potential impact on the housing market in 2025. …The good news for the upcoming year’s outlook on housing is that the overwhelming majority of such sourced building materials are not imported. Instead, housing market experts suggest that interest rates and bottlenecks in existing supply chains are the real threats to the market worth watching. …The biggest potential tariff expense impacting home builders would come from enacting such a cost on Canadian lumber. Market observers remain skeptical that the President-elect would really enact the tariff on close ally Canada’s raw materials. The real threat to the housing market in 2025 comes not from potential tariffs, but instead from high interest rates and lingering bottlenecks in supply chains, according to Stephen Haines of Artisan Built Communities.
BOSTON — Placing tariffs on Canadian products entering the U.S. would be “devastating” to the New England economy, Gov. Maura Healey said during an interview with the Herald this month. …Massachusetts relies heavily on Canadian lumber for building homes, and another Trump pledge to enact an additional 10% tariff on Chinese products would stymie local efforts to spur the energy and advanced manufacturing industries, Healey said. “Where does our lumber come from? A lot of it from Canada. So this really hurts. And it’s not just Canada. Look at China. We’re trying to lean hard into technology, applied AI in the state,” Healey said. “There are a lot of component parts that, sure, we want one day to be made here in America but right now they’re made overseas. So tariffs would really hurt our state.” “It would be devastating for the New England economy if President Trump imposes tariffs,” the governor added.
In 2024, the Canadian government released a new housing plan aimed at building more homes and addressing housing unaffordability. As part of that plan, Prime Minister Justin Trudeau announced that $600 million in funding will be provided to build homes cheaper and quicker using “innovative technologies.” The funding is earmarked for building more housing, including prefab and modular homes, by automating processes and using materials like mass timber construction, robotics and 3D printing… Building materials like mass timber, including cross-laminated timber, offer a renewable low-carbon substitute for conventional materials, reducing a building’s carbon footprint. These modern methods have been successful internationally, producing quality construction that is quickly completedHowever, systematic obstacles like governmental inertia and mismatched incentives must also be tackled to unlock their full potential in Canada.
New actions are being implemented to help more people find affordable homes in the communities where they live and work. …Starting Jan. 1, 2025, the B.C. home-flipping tax will be in place to discourage investors from buying housing to turn a quick profit. People who sell their home within two years of buying will be subject to the tax, unless they qualify for an exemption, such as divorce, job loss or change in household membership. It is expected approximately 4,000 properties will be subject to the tax in 2025. All revenue from the tax will go directly into strengthening housing programs and building new affordable homes in B.C. …Other measures to help make homeownership more accessible and improve the supply of housing, which came into effect April 1, 2024, are new thresholds for the first-time homebuyers’ program and the newly built home exemption.
Canadian forests are increasingly primed for severe, uncontrollable wildfires, a study published Thursday said, underlining what the authors described as a pressing need to proactively mitigate the “increased threat posed by climate change.” The study by Canadian researchers, published in the journal Science, looked at Canadian fire severity from 1981 to 2020. “The widespread increases, along with limited decreases, in high-burn severity days during 1981 to 2020 indicate the increasingly severe fire situation and more challenging fire season under the changing climate in Canada,” the study read. Co-author Xianli Wang, a research scientist with the Canadian Forest Service, says there were on average an additional two days conducive to high-severity fires in 2000 to 2020, compared to the previous two decades. In some areas, it was closer to five days. …The greatest increase in burn severity days was recorded in an area covering northern Quebec and an area covering Northwest Territories, northwest Alberta and northeast British Columbia.
For over 20 years, the BC Community Forest Association (BCCFA) has championed the community forest program, highlighting its ability to foster social, economic, ecological, and cultural resilience. …Community forests are long-term, area-based tenures managed by local communities to reflect local priorities and values. With 61 community forests currently operating across the province, and growing interest in local resource management, the program is gaining broad recognition and support. …According to the December BCCFA Newsletter, the city of Quesnel along with five First Nations, have come to an agreement on the establishment of the Three Rivers Community Forest (TRCF). …Farther south, the BCCFA provided Nakusp and Area Community Forest (NACFOR) with funding through the province’s Economic Recovery Initiative under the Crown Land Wildfire Risk Reduction program. …There were 14 other community forests across the province supported by this initiative.
More than 280 million trees were planted in B.C. forests in 2024 due to the Province’s efforts. “2024 was a banner year for tree planting in B.C., including celebrating 10 billion trees planted since 1930,” said Ravi Parmar, Minister of Forests. “Our government’s commitment to sustainable forests has seen us lead the country by planting more than two billion trees since 2017.” …The Province’s 2024 reforestation efforts were primarily focused on fire-damaged areas. This was in addition to the work undertaken by forest tenure holders as part of their legal requirements to regenerate harvested areas. “We are in good shape right now based upon a run of strong years and the government’s commitment to tackling the impacts of climate change through adaptation and keeping reforestation programs at a level to help regrow our forests,” said John Betts, executive director, Western Forestry Contractors’ Association.