Lumber cost uncertainty has risen from the start of the year, driven in part by potential higher tariffs, particularly on Canadian softwood lumber. Despite the continued use and threat of tariffs, US sawmill and wood preservation firms have not increased production to a level that replaces imports. In fact, utilization rates continue to fall, meaning they have the capacity to produce more lumber but are simply not operating at that level. As these firms produce at lower levels, their employment has fallen over the past few quarters. At the same time, reduced foreign competition and artificially higher prices have lessened the incentive for firms to expand output, even as demand remains high. As a result, US mills remain unable to meet the nation’s full lumber consumption needs. …There is ample room to increase production, but… producers may see no benefit of increasing output, as it would push prices lower since demand has fallen from the start of the year.