Wood prices have plummeted by 23% since August, prompting industry giants to urgently cut production capacity, sounding the alarm for the US economy.

According to foreign media reports, since early August, lumber prices have plummeted by 23%; affected by the downturn in the construction industry and uncertainties surrounding tariffs, lumber mills are reducing production capacity. This phenomenon is seen as a signal that the US economy may be facing risks. As of last Friday, lumber prices had dropped to $535 per thousand board feet. However, two large sawmill companies in North America recently announced production cuts, which have somewhat slowed down the pace of the price decline, otherwise the drop may have been even greater. Interfor, the third largest lumber producer in North America, announced last week that it will reduce production capacity by 12% at its sawmills in the southern United States, the Pacific Northwest, British Columbia, and eastern Canada; another company, Domtar, announced the suspension of production at a sawmill in Arkansas, indefinite idling of a sawmill in Quebec, and cancellation of one production shift at another factory in Quebec. Analysts point out that the weakening of lumber prices is worrisome because it has always been a "reliable leading indicator" for the direction of the real estate market and overall economic activity. Changes in lumber prices often reflect trends in related sectors in advance. Lumber prices have fluctuated significantly in recent times: earlier, the Trump administration announced an investigation into the national security implications of imported lumber and threatened to impose high tariffs on all Canadian goods, which led to a price increase in spring; later, Trump softened his stance towards Canada, causing prices to sharply decline; in May, due to concerns about an impending increase in current tariffs on Canadian lumber and Trump's continued threats of new tariffs, buyers began stocking up in advance and lumber prices surged again. It is worth noting that if Trump imposes new tariffs on lumber, it will be a separate policy from the existing anti-dumping and countervailing duties on Canadian softwood lumber imports. The US-Canada softwood lumber trade dispute has been ongoing for decades, and last month, most Canadian producers faced a tax rate increase from 15% to about 35%. Related stocks and exchange-traded funds (ETFs) include Weyerhaeuser Company (WY.US), West Fraser Timber Co. Ltd. (WFG.US), Louisiana-Pacific Corporation (LPX.US), SPDR S&P Homebuilders ETF (XHB.US), and iShares Global Timber & Forestry ETF (WOOD.US) among others.