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 is threatening to use “economic force” to make Canada the 51st American state. While his comments may be reckless, they are in part due to Canada’s over-reliance on the US market in terms of trade. The benefits of international trade are undoubtedly positive. It’s well-established that when countries can produce a product or service more cheaply than others, giving them what’s known as a “comparative advantage,” all other nations engaged will gain from that trade. …But the key challenge Canadian policymakers face is an over-reliance on the US as Canada’s primary market, with 75% of all Canadian exports headed south. …Canada can no longer take easy access to the U.S. market for granted. …Bringing down barriers to trade across Canadian provinces would create conditions that could enable Canadian companies to be more competitive internationally, and beyond the U.S. market in particular.
NEW YORK — The U.S. increasingly relies on Canadian crude oil to meet domestic demand and that relationship faces potential strain amid the threat of tariffs from President-elect Trump. More than 50% of crude oil imported to the U.S. comes from Canada, up from 33% in 2013. The increase follows a jump in production from Canada’s western provinces and growing pipeline capacity to its southern neighbor. Trump has threatened blanket tariffs of up to 25% on products from both Canada and Mexico. That has raised concerns about higher energy costs trickling through the entire U.S. economy. “All three countries remain heavily reliant on each other economically, and hefty taxes on key U.S. imports like crude oil or softwood lumber risk exacerbating U.S. consumer inflation,” said the Americas for UBS Financial Services. …Canada, with its proximity to the U.S., is also the nation’s biggest trading partner. 
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. 
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. 
The monitor for the San Group of companies has been granted broader powers by the Supreme Court of B.C. to manage and make decisions about the financially troubled forestry company, which has operations in Port Alberni. The San Group’s protection from creditors was extended at a court hearing in Vancouver on Thursday. The next hearing is set for Jan. 16. Expanded powers granted to Deloitte include the ability to administer the company’s restructuring and any winding down of the business, plus liquidating property and disposing of assets. The monitor is permitted to continue running the business, and said it anticipates working with current management. The various parties are expected to be back in court to ask for approval for a sale and investment solicitation process. …The court agreed the company can increase its borrowing limit to $1 million — up by $400,000 — to keep operations going.
SPOKANE, Washington — Brazil’s Suzano is exploring an offer for Clearwater Paper, according to people with knowledge of the matter. The company is working with an adviser as it seeks to reach an agreement, said the people. A deal hasn’t been finalized and it’s possible one won’t be reached. Representatives for Suzano and Clearwater declined to comment. Spokane, Washington-based Clearwater, which manufactures pulp and paperboard products, had a market capitalization of $409 million as of Thursday’s close and its shares have fallen 31.6% this year. Clearwater’s shares jumped as much as 19% after the close of regular trading Thursday. Suzano, which is the largest supplier of hardwood market pulp in North America, has been pushing further into the US, most recently buying two paperboard mills in Arkansas and North Carolina in a deal valued at $110 million. [END]
The union representing 45,000 dock workers on the U.S. East and Gulf Coasts and their employers on Wednesday said they reached a tentative deal on a new six-year contract, averting further strikes that could have snarled supply chains and taken a toll on the U.S. economy. The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) employer group, called the agreement a “win-win.” The deal includes a resolution in automation, which had been the thorniest issue of on the table. …”This agreement establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports.” Terms of the deal were not disclosed. ILA and USMX have agreed to continue operating until the contract is ratified. …Employers at the ports stretching from Maine to Texas include terminal operators like APM, owned by Maersk, as well as China’s COSCO Shipping and Switzerland’s MSC.
If president-elect Donald Trump… follows through with his tariff threat, it could have economic consequences for the U.S. lumber supply chain, according to Rajan Parajuli at NC State. …US. companies would likely attempt to recoup tariff-related losses by raising the price of Canadian softwood lumber, which would potentially impact the housing market by making building materials more expensive. …Parajuli highlighted the 2006 U.S.–Canada Softwood Lumber Agreement as an example of how tariffs can impact the supply chain. …Under the agreement, which was active until 2015, U.S. lumber producers gained $1.6 billion and U.S. consumers lost $2.3 billion as softwood lumber imports from Canada declined by 7.78% in the months when export taxes took effect. “U.S. consumers not only paid producers’ gains, but also the losses that resulted from the export taxes,” Parajuli said. In the long term, the U.S. would need to work with Canada to negotiate a new softwood lumber agreement, according to Parajuli. Germany, Sweden and other trade partners simply don’t have the inventory or capacity to displace Canada in lumber exports.
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.
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. 
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.
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.
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.
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.
The Biden administration is dropping its efforts to issue a policy to protect old-growth forests — though the president previously touted protecting such forests as an important component of his climate agenda. Late Tuesday, Forest Service Chief Randy Moore announced that the agency did not plan to move forward with proposed protections for old trees. The Forest Service also published a letter Moore wrote to regional officials. That letter cited “place-based differences that we will need to understand in order to conserve old growth forests.” …However, with the transition to the second Trump administration looming, even some environmental advocates say halting the effort may have been a savvy move. Alex Craven, for the Sierra Club, noted that a congressional repeal could prevent future Democratic administrations from pursuing a substantially similar rule in the future. …Biden’s proposal to protect the forests had garnered pushback from Republicans and the timber industry.
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.
