Robert Dietz
The Trump 2.0 administration is underway and disruption is the word of the day in Washington, D.C. The new Trump team hit the ground running, with policy action expected in the areas of regulatory reform, a smaller and more efficient federal workforce, extension of the 2017 tax cuts, tariffs as revenue generators and negotiation tools, and more to come on immigration actions and a more secure border. The sheer breadth of policy actions is a lot for the economy to digest. These policies will offer home builders and remodelers both positive and negative risks in the months ahead. This dual set of risks has been reflected in financial markets, with stocks valuing the focus on growth and efficiency but the bond market reflecting inflation and budget deficit concerns. As a result, investors have pushed long-term interest rates higher since last fall, with the 10-year Treasury rate in the 4.5% to 4.6% range. Mortgage rates remain elevated near 7%.
NAHB projects more economic growth in the quarters ahead, albeit with some disruption in the presidential transition. There is a solid base to build on, with fourth quarter GDP growth coming in at a better-than-expected 2.3% annualized rate. Housing’s share of GDP registered at 16.2% at the end of 2024. The Federal Reserve is undecided on future risks to both inflation and unemployment and will likely hold the federal funds rate at the current top target of 4.5% until at least the third quarter. …However, home sales and building conditions will depend greatly on which policies are for negotiation (such as a proposed 25% tariff on Canadian and Mexican imports) and which policies are intended to be long-term changes to the economy (regulatory reform, for example).Tariffs on Canadian lumber are a near-term concern, with the existing duty rate speculated to increase from a current 14.5% rate to near 30% later this summer.
WASHINGTON — Reports indicate that the B.C. Minister of Forests has created an “Advisory Council” to develop strategies for combating U.S. antidumping and countervailing duties. These duties are in place as a result of repeated findings by the U.S. Department of Commerce and U.S. International Trade Commission that Canada’s egregious ongoing dumping practices and long-standing subsidies to its industry have caused havoc in the U.S. market. Andrew Miller, Chairman and Owner of Stimson Lumber, stated that “this is not a complicated issue. Canada must stop dumping its excess lumber production into the U.S. market and should stop subsidizing its industry instead of convening an ‘Advisory Council’ in British Columbia to study ways of getting around U.S. trade laws.”
As President Donald Trump ushers in a slew of new policy changes, the proposed 25 percent tariffs on imports from Canada and Mexico—if implemented after the recently introduced 30-day pause—could significantly escalate the cost of lumber, further complicating the already strained U.S. housing market. Some experts predict a near-tripling of costs that could undermine home affordability at a time when the nation grapples with a housing crunch. …According to Carl Harris, chairman of the National Association of Home Builders (NAHB), over 70% of softwood lumber and gypsum, which is used in drywall, originate from Canada and Mexico. …Robert Dietz, chief economist at the NAHB, outlined the risks posed by tariffs as it relates to lumber costs. …Per Dietz, not only could they nearly triple the cost of lumber, a critical component of home building, but they would also drive up prices for consumers, putting homeownership out of reach for many Americans.
Data provided by the National Association of Home Builders (NAHB) and Fastmarkets Random Lengths confirm that cost of lumber is a very small component of the price of a new home. Consequently, duties on a share of that lumber imported from 
A 30-day delay in implementation of tariffs on Canadian shipments to the US reset recent trends in framing lumber markets. Sales picked up in most regions and species, but higher quotes early in the week retreated nearer to last week’s levels. Western S-P-F sales were mixed, but several secondaries reported their strongest days of the year as buyers padded relatively thin inventories with insurance loads. Prices remained close to last week’s levels, but supplies of some items tightened in late trading. Lumber futures swung from extreme volatility Monday and Tuesday to an upward trend towards the end of the week. The threat of tariffs drove prices up, but selling commenced after the delay. The biggest gains were posted in green Fir, where a supply-side rally pushed Std/#2&Btr dimension prices $15-35 higher. The Random Lengths Framing Lumber Composite Price posted another modest adjustment, finishing $5 higher. Most Southern Pine producers throttled back quotes.
The U.S. market accounts for 5-10% of Sweden’s forest industry exports, depending on the segment, meaning the direct impact of potential new tariffs remains limited, said Christian Nielsen, market analyst for wood products at Swedish Forest Industries Federation. The U.S. relies on imports for 25% of its lumber consumption, primarily from Canada. Higher tariffs on Canadian wood could raise costs for American consumers while improving the competitive position of European suppliers. However, Nielsen noted that future tariffs directly targeting EU exports remain uncertain. In the pulp and paper sector, the U.S. could rely entirely on domestic production, reducing the need for imports. Sweden currently exports 7% of its pulp and 5% of its paper and board products to the US. In total, Sweden exports 92% of its paper and board production, and global trade flows could be affected by tariff changes. [END]
Year-end 2024 Southern Pine lumber (treated and untreated) exports hit 565.7 Mbf, which was up 11% over the previous year, according to December 2024 data from the USDA. On a monthly basis, Southern Pine lumber exports were up 21.9% in December 2024 over the same month in 2023 but down 2.2% from November 2024. …Softwood imports, meanwhile, were down 11.5% in December 2024 compared with the same month a year ago and down 11% from November 2024. …Mexico remains the largest export market (by volume) of Southern Pine and treated lumber, up 23% over 2023 with 150.2 Mbf of imports. The Dominican Republic, the No. 2 importer of Southern Pine, ended the year 19.1% ahead of 2023 with 92.3 Mbf. India’s total of SYP imports ended 3.1% ahead of last year with 36.6 Mbf. Canada: up 30% with 27.4 Mbf in 2024. Canada ended the year as the No. 5 importer of Southern Pine lumber (treated and untreated).
Washington D.C.–The Sustainable Forestry Initiative (SFI) is proud to announce a groundbreaking new project to advance climate smart forestry practices across the United States, supported by a generous investment of over $800,000 from the Doris Duke Foundation. The project, Advancing Carbon Stewardship Practices for Large Landowners in the United States, will use a forest sector-focused approach to advance forest management and conservation activities to both enhance the carbon sink and reduce sources of emissions from forests. Forests … are experiencing increased frequency and severity of fire, drought, pest outbreaks, and disease—all of which negatively impact forest and community health, economic development, and resiliency while threatening our safety. “We are so thankful for this investment from the Doris Duke Foundation to leverage our network, scale, and the SFI Forest Management Standard, which includes progressive requirements on climate and fire,” said Kathy Abusow, President and CEO of SFI. 
A bipartisan group of senators introduced legislation Thursday that would create a new Wildfire Intelligence Agency, seeking to streamline the federal response to fires. The bill, led by Sens. Alex Padilla (D-Calif.), Tim Sheehy (R-Mont.), John Hickenlooper (D-Colo.) and Steve Daines (R-Mont.), came in the wake of recent blazes that decimated parts of Southern California, primarily in the Los Angeles region. “The scale of the wildfire crisis demands a singular, whole-of-government wildfire intelligence center to foster cross-agency collaboration and save lives,” Padilla wrote in a statement. The joint office would share information with the Department of Agriculture, the Department of Commerce and the Department of the Interior, according to the legislation. “Wildfires don’t care about state lines or forest service boundaries,” Hickenlooper said. “A centralized wildfire intelligence center will speed our response to fires and promote cross-agency collaboration to tackle them.”
SACRAMENTO, Calif. — As Los Angeles reels from deadly January wildfires that destroyed thousands of homes, California Gov. Gavin Newsom signed an order Thursday directing the state to advance long-delayed regulations requiring homeowners in high-risk areas to clear combustible materials around their homes. Newsom ordered the state to publish draft regulation next month, with a deadline to adopt those rules by the end of the year. The requirements were passed by lawmakers in 2020 and originally set to take effect by Jan. 1, 2023. Newsom signed the order after he returned from Washington to advocate for disaster aid. The rule requires homeowners to clear materials like dead plants and wooden furniture within 5 feet of their homes in fire-prone areas. As multiple fires roared through LA neighborhoods in January, the regulations still weren’t written, and the state Board of Forestry and Fire Protection told The Associated Press last month it had no firm timeline for completing them.
The State of New York last week announced the launch of two new interactive tools for recording and tracking the number of trees planted as part of a climate initiative to reach 25 million trees by 2033. Developed by the state’s Department of Environmental Conservation and its Office of Information Technology Services, the Tree Tracker allows state agencies and private organizations and individuals to report the number and location of trees planted, as well as planting dates, species and tree size. “New York is taking decisive action to protect our environment and strengthen communities’ ability to withstand severe weather,” Gov. Kathy Hochul said in the press release. “Our progress toward the 25 Million Tree goal is a testament to the power of community-driven action, and the new Tree Tracker will make it easier for New Yorkers to track our progress, share updates and contribute to a healthier environment for the future.”
The Government has announced a new support mechanism for sustainable biomass generation post-2027. From 2027, Drax and other eligible large-scale biomass generators will be supported via a lowcarbon dispatchable CfD (Contract for Difference). If approved, the plan will keep the power station running until 2031. Under this proposed agreement, Drax Power Station can step in to increase generation when there isn’t enough electricity, helping to avoid the need to use more gas or import power from Europe. When there’s too much electricity on the UK grid, Drax can reduce generation, helping to balance the system. Importantly, the mechanism will result in a net saving for consumers. …The agreement also prioritises biomass sustainability. Drax supports these developments and will continue to engage with the UK Government on the implementation of any future reporting requirements.
The UK government has agreed a new funding arrangement with the controversial wood-burning Drax power station that it says will cut subsidies in half. …The new agreement will run from 2027 to 2031 and will see the power station only used as a back-up to cheaper renewable sources of power. …The government says the company currently receives nearly a billion pounds a year in subsidies and and predicts that figure will more than halve to £470m under the new deal. …The new agreement also states that 100% of the wood pellets Drax burns must be “sustainably sourced” and that “material sourced from primary and old growth forests” will not be able to receive support payments. All the pellets Drax burns are imported, with most of them coming from the USA and Canada. BBC has previously reported that Drax held logging licences in British Columbia, and used wood, including whole trees, from primary forests for its pellets.
As institutional interest in real asset investing grows, forestry is gaining recognition beyond its core enthusiasts for its ability to produce income and capital growth, alongside added benefits like carbon sequestration and biodiversity protection. However, trust in sustainability-focused investments remains a challenge. In EY’s 2024 Institutional Investor Survey, 85% of respondents said misleading claims about sustainability are more of a problem today than five years ago, despite regulators’ efforts to quash exaggerated ESG statements. …A persistent narrative is that established timberlands are better, safer investments than new greenfield developments. The truth is more nuanced. Greenfield projects, which involve reforesting degraded or underused land, offer an opportunity to achieve ‘additionality’ – a crucial component of effective carbon sequestration. …For forestry investors, the upshot is clear: regulatory uncertainty is currently a barrier to restoring widespread trust in carbon markets, and resolving this will take time.
Can you fly airplanes with wood? The answer is: yes. It’s a very qualified “yes” — and it may not happen for many years — but the potential exists to manufacture sustainable aviation fuel from residual wood products and other non-petroleum-based sources that can reduce an airplane’s carbon footprint. “The technology to fly airplanes with wood exists but needs to be scaled up to show the true potential,” Rick Horton, executive vice president of Minnesota Forest Industries, told the House Agriculture Finance and Policy Committee at an informational hearing Monday. Horton was one of several testifiers who said using sustainable aviation fuel to power airplanes is in its infancy and needs large-scale development — and probably government subsidies — to make it economically viable… Sustainable aviation fuel currently costs two to five times more than conventional jet fuel.