Kelly McCloskey
We reached out to Robert McKellar at Harmattan Risk in August 2024 for comment on the increasing pace of change in the forest sector, shaped by political forces and government intervention. Robert’s op-ed offered a thoughtful analysis of how inherent political risks—especially those linked to Canada–US trade friction—could rapidly unsettle an industry long reliant on stability. At the time, Trump’s potential political comeback was still largely speculative. Since that op-ed, the political landscape has shifted dramatically. Trump’s re-emergence is no longer a remote possibility but a concrete reality that has intensified uncertainty across the sector. With these developments in mind, we reconnected with Robert to update his analysis and explore how the risks he foresaw have become even more pronounced. [full disclosure, Robert McKellar is Tree Frog co-editor Sandy McKellar’s brother]
WASHINGTON — U.S. President Donald Trump said again Wednesday he plans to hit Canada and Mexico with devastating duties — but a White House official confirmed on background that the tariff plans could change through negotiations. …He signed an executive order to implement “reciprocal tariffs” by raising U.S. duties to match the tax rates that other countries charge on imports starting April 2. He ordered 25% tariffs on all steel and aluminum imports into the United States on March 12. Trump also floated the idea of imposing tariffs on automobiles and forest products in April. …Trump himself seems to be having a hard time keeping track of his massive tariff agenda. …Many experts say Trump’s actions are intended to shake up Canada and Mexico ahead of a review of the continental trade pact. The Canada-U.S.-Mexico Agreement was negotiated during the first Trump administration to replace the North American Free Trade Agreement. 
Yesterday, we featured an op-ed by political risk management expert Robert McKellar on how Donald Trump’s re-election is changing the political risk landscape for the Canadian forest sector. While U.S. trade disputes are not new, the unpredictability of Trump’s approach to trade policy creates new challenges that Canadian exporters must assess and manage. McKellar presents a structured way to evaluate these risks using the devil’s advocacy approach, a method that considers both worst- and best-case scenarios to develop a balanced assessment. Trump has proposed three different types of tariffs—bi-national, product-specific, and reciprocal—which, if applied together, could significantly impact the sector. By examining multiple possibilities, McKellar provides companies with a way to better prepare for potential disruptions rather than reacting in crisis mode. And as today’s 
The U.S. Department of Commerce initiated the 
SQUAMISH, BC — Peter Dickson has owned FraserWood Industries, a Squamish-based timber manufacturer, since 1998. He has grown his business, earning contracts near and far, including the Sea to Sky Gondola service building and log cabins at Walt Disney World. One third of his business is exported to the US. …“The biggest problem is our American customers will be reluctant to sign moving forward with the uncertainty.” …David Girard sits on the government relations committee for the Sea to Sky Canadian Home Builders Association, and he said the tariffs would have an outsized impact on consumers and demand for Canadian products, and cause reduced employment. According to a recent survey by KPMG, 48% of Canadian companies contacted said they would invest or produce in the U.S. to retain American customers and reduce costs. But for FraserWood, that’s not an option.
The Trump administration has opened a broad new front in its global trade conflict, proposing to affix levies reaching $1.5 million on Chinese-made ships arriving at American ports. Such fees would apply even on vessels made elsewhere — an approach that risks increasing costs on raw materials to factory goods. …It is engineered to discourage reliance on Chinese vessels in supplying Americans with products, while aiming to spur the revival of a domestic shipbuilding industry after a half-century of veritable dormancy. …The proposal would isolate China while diminishing American reliance on its industry. …The plan was the result of an investigation, started during the Biden administration, into the dominance of the Chinese shipping industry, in response to a petition filed by labor unions. Almost one-fifth of container vessels arriving at American ports are made in China. [to access the full story a NY Times subscription is required]
If Canada is hit with 25% tariffs… the trade impacts for the forest products sector will be wide ranging. …Lumber is the most talked about commodity with respect to tariffs, largely due to the size of the market but also the fact that tariffs would be in addition to duties which are already being paid and are set to rise come August. The US can’t supply its own lumber demand and will have to continue to import Canadian lumber. Prices will rise. …The US is even more reliant on OSB from Canada. …In softwood, ~70% of demand is met by imports and in hardwood the proportion is even higher, at 89%. Canada is the largest softwood pulp supplier to the US, representing 74% of imports; a 25% tariff on Canadian goods would inevitably result in higher costs for US customers that produce paper, packaging and tissue. There are no easy near-term substitution options.
NEW YORK — Mercer International reported fourth quarter 2024 net income of $16.7 million compared to a net loss of $87.2 million in the fourth quarter of 2023 and a net loss of $17.6 million in the third quarter of 2024. Q4 revenues were $488 million, down from $502 million in Q3, 2024 but up from $470 million in Q4, 2023. Mr. Juan Carlos Bueno, CEO, stated: “In the fourth quarter of 2024, softwood pulp prices remained strong, decreasing slightly from recent record prices.” …Hardwood pulp prices in China and North America decreased in the fourth quarter of 2024 as the market absorbed capacity increases from earlier in the year. …Lumber sales realizations increased, driven by modestly higher prices in the U.S. market, while in Europe, prices remained stable. 
MONTREAL — Stella-Jones announced financial results for its fourth quarter and year ended December 31, 2024. Sales for the fourth quarter of 2024 amounted to $730 million, up 6% from sales of $688 million for the same period in 2023. …Net income for the period amounted to $52 million compared with $56 million in the corresponding period of 2023. …Sales for the year ended December 31, 2024 reached $3,469 million, up 5%, versus sales of $3,319 million in 2023. Net income in 2024 was $319 million, compared to net income of $326 million in 2023. Despite the lower net income, earnings per share in 2024 was higher at $5.66 versus $5.62 in 2023 due to the continued repurchase of shares. …Eric Vachon, CEO of Stella-Jones, “We achieved solid results in our infrastructure product categories, even in the face of softer market demand. We acquired new customers, maintained our expanded EBITDA margin of over 18%, and delivered strong operating cashflows.”
Home Depot’s CFO said people are “moving on” from today’s high mortgage rates and have started investing more in their homes. The home improvement company reported strong fourth-quarter results, although CEO Ted Decker said consumers are still reluctant to make larger investments like a kitchen remodel. Experts say people may start to view today’s mortgage rates as normal, especially when compared to historic rates. …“Housing is still frozen by mortgage rates,” Richard McPhail, said. Yet McPhail said Home Depot, which reported strong Q4 results Tuesday, has seen sales growth in nearly 80% of its U.S. geographic regions. …For Q4, 2024, Home Depot saw a 14.1% year-over-year increase in sales, which “exceeded our expectations,” Ted Decker CEO, said. …“We saw greater engagement in home improvement spend, despite ongoing pressure on large remodeling projects,” Decker said
Japan’s timber industry is seeing notable changes, with predictions of a drop in log imports and varying trends in lumber imports. These shifts are influenced by economic factors, environmental concerns, and policy decisions affecting how Japan uses timber. The Japan Lumber Importers Association has shared its predictions for wood imports, expecting a 13% decrease in log imports for 2024. …While log imports are expected to decline, the situation with lumber imports is more complex. In 2024, lumber imports are projected to increase by 17.2%. However, in the first half of 2025, a 12.5% decrease is expected compared to the same period the previous year. Several factors influence these mixed trends… Japan’s housing starts decreased by 4.6% year-over-year in 2023, with owner-occupied housing falling by 11.4%. These changes directly impact the demand for lumber, influencing import volumes.
For the past 25 years, the Federal Emergency Management Agency (FEMA) has helped develop building codes, the construction standards that help houses survive hurricanes, wildfires and earthquakes. Now, the Trump Administration has ordered that to stop. …FEMA is dropping out of the latest effort to improve building codes. …The recommendations FEMA submitted were filed with the International Code Council, an independent association that develops building codes used by states and local governments. The proposals FEMA is retracting its involvement from focus on helping homes survive strong winds, seismic shaking and rising floodwaters. …The ICC convenes experts and stakeholders in the building industry to review and improve building codes every three years, and is developing a new set of standards now. After they’re approved, many local and state governments across the country adopt the codes, which set the mandatory construction rules in their communities.
Polarization is gripping the country and the centre isn’t holding, Environment and Climate Change Canada found when setting the country’s latest emissions reduction target. The department solicited feedback… to determine what Canada’s internationally binding 2035 pollution reduction obligations should be. …The results found that overcoming polarization is a major hurdle to implementing aggressive emissions reductions that climate scientists say is required to avoid catastrophic warming. About two-thirds of Canadians who participated support stronger measures to address climate change. “There was little middle ground, and very few people were satisfied with the status quo,” according to the findings. …When asked if the federal government is doing enough to fight climate change, 47% believe Canada needs to do more, compared to 36% that feel existing measures go too far. …Polarization is gripping the country and the centre isn’t holding, Environment and Climate Change Canada found when setting the country’s latest emissions reduction target.
