Lumber futures slide below $565 on escalating trade tensions

Lumber futures fell below $565 per thousand board feet, nearing a five-month low as the escalating Canada-US trade war weighed on demand.

Canada announced counter-tariffs on several US goods, including lumber, stating that the measures were intended to protect Canadian industries.

Prime Minister Carney said he remained open to negotiations but would not accept a subordinate position to the US.

The dispute is weighing on the forest sector of both countries, with lumber prices rising sharply following the tariff announcement.

More than 20 sawmills across British Colombia have closed since 2023, while seasonal renovation activity in the US is also facing pressure from elevated prices.

Meanwhile, persistently high inflation has reduced homeownership affordability and kept mortgage rates elevated, while construction spending remains subdued.

US housing starts fell 12.4% in July, driven by a sharp decline in lumber-intensive single-family construction, further weakening demand.