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Market Report: 2025 Wood Products Trends

2025 has begun! After very difficult years in 2023 and 2024, largely due to federal interest rate hikes leading to a slow down in the housing market, there is a sense of anticipation that 2025 will lead to better markets.

The outlook going forward is cloudier than ever, however, as a raft of issues, such as inflation, the labor market, forest management policies, United States debt and GDP growth continue to weigh on the market. Throw in a touch of uncertainty due to the Trump administration actively discussing tariffs and renegotiating trade policy, and the stage is set for a very interesting year!

There are a few issues that we feel will have an overweight effect on wood products markets moving forward this year.

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Environmental Policy

The wildfires hitting Southern California have been a true tragedy, leading to at least 24 deaths and more than 12,000 structures destroyed. And they aren’t over. The cause of the fires is still unknown, but they have provoked a necessary conversation as to how the destruction from these fires could have been mitigated and the loss of life and livelihood reduced. We have our own personal experience with the Beachie Creek fire which led to five deaths, 1,100 structures destroyed, and residents displaced for years. We are four years past the fires and still dealing with the repercussions.

Environmental litigation leads to administrative reluctance to implement simple landscape-wide mitigation solutions, such as fuel reduction, fire breaks, or even water accumulation in reservoirs. Choosing not to manage our resources is in itself a management decision, but the cost of that neglect may not be evident until disaster occurs.

We all have the opportunity to be environmental stewards by actively managing our natural ecosystems, or environmental menaces, by leaving them to neglect. Well intentioned, but ultimately destructive, regulations have replaced well-reasoned scientific forest management to management by litigation and judicial decree. Public lands management projects have been the most common subject of litigation (37%) nationwide and the greatest share of which (47%) challenged forest management projects. Of the forest management projects litigated, 38.8% have been to stop timber harvest projects and another 38.8% have been against fuel management projects.

Overbearing environmental legislation pushes out domestic manufacturing of products from paper to building materials and moves them offshore, which robs the domestic economy of opportunities to add value from low-value residuals.

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Forest Management

Active forest management is essential to reducing hazardous fuel load on overstocked forests. This creates a forest structure that is more resilient to fire and other natural disasters, while also offering important timber supply for local industry to produce forest products for the domestic U.S. marketplace. It is about time we recognize that encouraging local production of forest products has the potential to reduce the cost of all wood products.

We, like many other timber companies in the Pacific Northwest, are primary contractors with the Federal government for the timber we process into building products. If the Federal government were to offer a larger volume of timber sale contracts with management goals in mind, we have the opportunity to produce more affordable building products locally, instead of importing from foreign companies.

If President Trump is able to break the stranglehold environmental groups have on our forest management policies, we can look forward to more affordable locally-produced wood products and a touch of prosperity to return to our rural communities.

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Tariffs

President Trump has proposed a wide range of tariffs on imported products from all over the world, but the proposed 25% tariff on goods from Canada and Mexico have been the subject of most conversation in our industry. We heard that Canadian wood products companies were responding by accelerating product shipments to reloads south of the Canadian border prior to inauguration, invoicing for the tariff amount on orders placed after inauguration, and potentially pushing for retaliatory tariffs if U.S. tariffs should go into effect.

It is important to note that the current Softwood Lumber Agreement already imposes a varying tariff on LUMBER products entering the U.S., but specifically omits all products we produce for the marketplace such as veneer and panels. If such a tariff were to be imposed for our products, it would bring the tariff rate in line with other softwood products produced in Canada, and put us on a more level playing field with imported products.

Above all, it should not be U.S. policy to impose disastrous regulations and policies on domestic producers and allow foreign manufacturers a pass. Our industry is subject to every environmental, labor, taxation, or other policy agenda the state or federal government wants to impose upon us. If a tariff equalizes U.S. regulatory “virtues” with foreign governments neglect of these same issues, I think it is a positive effect. NIMBYism shouldn’t be our domestic goal.

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Market Overview

We are cautiously optimistic about markets in 2025. The U.S. housing market has been in decline for the last two years since the Fed started tightening. Yes, the Fed rate has not decreased as much as some would like, but they are probably not far off a healthy long-term target. The housing market should improve and wood products markets along with it.

We are closer to the market now, with our Mass Ply products, as we sell complete building packages direct to contractor and developer. Architects and engineers are indicating that projects put on the shelf are coming back alive in 2025. We are being pressed for firm quotes for 2025 with good projects lining up. We are still week-to-week on our traditional commodity products, so market movement is a bit tougher to tell. We have had some slow weeks, but the trend is higher. We do not have an overweight inventory position, so we feel comfortable heading into the first quarter of 2025.

Our anticipation is that there will be a slight upward trend in market conditions, keeping in mind winter building conditions but also tariff impacts. By the second quarter we think there is going to be a market uptick as winter passes and regulatory reform starts to unfreeze U.S. productivity potential.

Cross your fingers and hope for better markets in the future, it means we are all winning.

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