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.
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.
Lumber prices have rebounded to around $560 per thousand board feet, up from a seven-week low of $531 on December 16th, driven by strong demand and supply constraints. U.S. existing home sales rose by 4.8% in November, the highest in eight months, reflecting growing momentum in the housing market, with more buyers entering as job growth continues, housing inventory rises, and consumers adjust to mortgage rates between 6% and 7%. Additionally, building permits surged by 6.1% in November, the highest level since February 2024, signaling strong future construction activity. On the supply side, production cuts and mill closures are restricting lumber availability as Western Forest Products reduced output by 30 million board feet, and Canfor Corp. shut two mills, cutting annual production by 670 million board feet. These supply limitations, coupled with U.S. tariffs on Canadian softwood lumber and rising import tariffs amid the China trade dispute, are pushing prices higher. [END]
US mortgage rates climbed closer to 7%, threatening to squeeze buyers trying to crack into the housing market. The average on a 30-year mortgage rose to 6.91% as of Jan. 2, up from 6.85% a week earlier, according to Freddie Mac data released Thursday. A measure from the Mortgage Bankers Association advanced 8 basis points to 6.97% in the period ended Dec. 27, a nearly six-month high. High borrowing costs are weighing on affordability. …“It’s not exactly a good way to start the new year,” said Odeta Kushi, deputy chief economist at First American Financial Corp. “Industry experts are coming to the consensus that 2025 is another year of higher for longer for the housing market. It’s not great news.” Mortgage rates tend to track Treasury yields, which continued to climb in late December after Federal Reserve policymakers projected a slower pace of interest-rate cuts in 2025 amid sticky inflation.
Rollercoaster market moves in the final days of 2024 offered a blunt reminder that investors are heading into a year of living dangerously. Stocks and bonds lurched lower after the Federal Reserve’s final policy meeting of the year, spooked by the notion that the central bank may be unable to keep cutting rates (as it had previously expected to) because of still-simmering inflation. The key is what Fed chair Jay Powell was careful not to say but what every fund manager knows: Donald Trump’s economic agenda could be bad for growth, fuel inflation, or even both. So for the first time in many years, investors have what they call “two-way risk” in the Fed policy. The central bank might be able to keep on cutting — the hunch is that this would be Trump’s preference. But it’s not outlandish to suggest it might start raising rates again instead. 
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.
WASHINGTON – U.S. Department of Agriculture (USDA) Secretary Tom Vilsack today unveiled a new program to support American wood processing facilities. USDA Rural Development is partnering with USDA Forest Service to provide funding through the new 
Reaching the lumber industry’s vast market share potential will require growth of a variety of lumber-based and hybrid building systems, but steel-timber hybrid construction represents one of the greatest areas of opportunity. According to an analysis for the SLB by Forest Economic Advisors, steel and mass timber warehouses represent a potential annual volume of 2.4 BBF, while steel and mass timber multifamily projects represent 3.6 BBF of annual opportunity. The SLB has been working with the Council on Tall Buildings and Urban Habitat and constructsteel to unlock this opportunity, beginning by launching the Steel-Timber Hybrid Buildings Conference in 2022. The partnership continued this year with the launch of “Steel-Timber Hybrid Buildings: Case Studies,” a CTBUH research report funded by the SLB and constructsteel. The organizations celebrated the launch in September at the CTBUH 2024 International Conference
Sporting aviator sunglasses and standing in front of a lectern last month in Manaus, Brazil, in the heart of the Amazon, outgoing President Joe Biden spoke of the importance of safeguarding the world’s carbon-rich forests — a message he delivered numerous times throughout his tenure. …“Despite Biden’s rhetorical flourishes about the importance of preserving and restoring old-growth forest ecosystems, his administration has led the charge to open more and more of these areas to commercial logging,” said John Talberth, president and senior economist at the Center for Sustainable Economy (CSE), a nonprofit think tank. …The Forest Service did not respond to questions about whether it expects to finalize a national old-growth amendment before Trump’s inauguration on Jan. 20. …Agriculture Secretary Tom Vilsack told The Associated Press that it would be “a serious mistake for the country to take a step backwards now that we’ve taken significant steps forward.” …As long as the Forest Service remains under the Department of Agriculture, things are unlikely to change, Talberth said.
Just days after Christmas in 1973 President Richard Nixon signed into law the Endangered Species Act, establishing one of the strongest conservation laws in history. …The Northern Spotted Owl has proven to be the most controversial of animal species listed. Its “threatened” designation in the late 1980s sparked legal battles between logging companies and environmental groups later named the Timber Wars. …The Northwest Forest Plan was amended in a monumental compromise between environmental groups and the timber industry in 2022 when Governor Kate Brown singed into law the Private Forest Accord. …The Forest Service has proposed additional amendments to the Northwest Forest Plan that may open up millions of acres of western lands to logging. The final environmental impact statement of that plan will be released in 2025 under the Trump administration, which has promised extensive deregulation. The Northern Spotted Owl remains listed as endangered.
…Dead and dying trees — referred to as snags — pose severe risks to public safety, firefighter effectiveness and long-term forest health. Yet, contrary to claims, post-fire removal of dead and dying trees on state and federal lands is minimal, hindered by relentless litigation that threatens lives, compromises recovery efforts and delays the natural regrowth of our treasured forests. …Snags are far from benign. They fall unpredictably, endangering those working in or passing through these areas. When ignited, these dead trees burn intensely, creating spot fires and releasing embers that exacerbate the spread of wildfires. As they decay, snags create dense brush fields — a dangerous cocktail of highly flammable fuels. …By supporting post-fire salvage operations, we can ensure our forests recover more quickly, safely and sustainably. This is not just about restoring the land — it is about protecting lives, preserving our natural heritage and preventing the next catastrophic fire.
Logging would be allowed in millions of acres of national forest in Washington, Oregon and California, including older trees currently off-limits to cutting, under proposed amendments to the Northwest Forest Plan. The conservation plan was enacted in 1994 and includes 24 million acres across federal land. It was intended to preserve mature and old-growth forests and protect species, including the marbled murrelet, threatened and endangered salmon and the northern spotted owl. Now the Biden administration has embarked on an update of the plan to address changes, including a loss of nearly 7% of protected old-growth forest within the plan area because of wildfire. The loss has eliminated gains of old growth achieved during the first 25 years of the plan. The Forest Service intends to issue a final environmental impact statement on the proposed amendments in 2025, under the incoming Trump administration. What that will mean for the outcome is unclear.
Senators Jeff Merkley and Ron Wyden announced the U.S. Department of Agriculture’s Forest Service is funding projects that will assist Tribes, nonprofits and private landowners in Oregon with their efforts to manage forests sustainably and permanently conserve private forests in partnership with the state. “Oregon’s forestlands – public – and private – need investments to remain healthy, and to withstand wildfires that impact us all,” Merkley said. “I’ve long championed efforts that ensure Tribes and all those who manage our forests have the tools they need for sustainable management. These new investments will help advance our shared mission of creating and conserving healthy, resilient forests for future generations”. …The investments from the U.S. Forest Service are funded by the Inflation Reduction Act and are part of nearly $210 million nationwide for Forest Landowner Support Projects.
ARIZONA — The Horton Fire northeast of Payson burned more than 600 acres of forest by Saturday and was 0% contained, according to the authorities with the Tonto National Forest. Nearly 150 firefighters and personnel battled the wildfire that threatened nearby communities of Tonto Creek Estates, Tonto Christian Camp, Tonto Fish Hatcher and Zane Grey Cabins, which were on a pre-evacuation “set” status and must be prepared to leave at the notice of authorities. The fire started Dec.14 and caused an emergency closure of the Apache-Sitgreaves National Forests and Tonto National Forest earlier this week. The forest closures would remain in place through Jan. 31, 2025, according to authorities.