FX.co ★ Lumber Futures Slide as Trade Tensions Escalate

Lumber futures fell below $565 per thousand board feet, approaching a five-month low as the escalating trade dispute between Canada and the United States weighed on demand. Canada announced counter-tariffs on a range of US products, including lumber, saying the measures were necessary to protect Canadian industries. Prime Minister Carney stated that he remained open to negotiations but would not accept a subordinate position to the US.

The conflict is straining the forest sector in both countries, with lumber prices having spiked sharply following the tariff announcement. Since 2023, more than 20 sawmills across British Columbia have closed, while seasonal renovation activity in the US is coming under pressure from elevated prices.

At the same time, persistently high inflation has eroded housing affordability and kept mortgage rates elevated, while construction spending remains subdued. US housing starts fell 12.4% in July, driven by a steep decline in lumber-intensive single-family construction, further undermining demand.