North America: trade barriers, market slowdown, and production contraction
In 2025, the North American forest industry faces the combined impact of new U.S. trade barriers and elevated duties on Canadian lumber.
In March 2025, President Donald Trump ordered a trade investigation into lumber imports. Over the summer, the U.S. Department of Commerce finalized its sixth administrative review of anti-dumping and countervailing duties on Canadian softwood lumber, raising combined duty rates for many producers to the mid-30% range. In late September 2025, a Section 232 presidential proclamation imposed a new 10% tariff on imported timber and lumber and 25% tariffs on certain wooden furniture and cabinets, effective October 14, 2025. Combined with existing duties, total rates on Canadian softwood lumber for some exporters now exceed 40%.
According to the National Association of Home Builders, the higher duties add up to $10,000 to the price of a new home and affect roughly one-third of U.S. softwood supply that originates in Canada. Analysts note that the United States cannot quickly replace Canadian imports because domestic mills lack spare capacity.
Lumber prices fall through the year as housing starts weaken under high mortgage rates. By early September, futures settle near $526 per thousand board feet, down 24% from August highs. Prices recover slightly by late December to around $543, but remain well below early-year peaks. Housing starts and permits remain below 2024 averages, confirming reduced building activity.
Producers respond by closing or curtailing operations. Canfor shuts its Estill and Darlington sawmills in South Carolina, cutting 350 million board feet of capacity. West Fraser closes its Augusta, Georgia, and 100 Mile House, British Columbia, mills. Domtar Wood Products reduces output by 100 million board feet in the fourth quarter. Companies cite weak demand, high log prices, and elevated trade duties as main factors.
Europe: production cuts, high raw material costs, and postponed EUDR
The European sawmill industry endures a year of high costs and structural pressure as raw material shortages, expensive timber, and regulatory uncertainty reduce profitability across the Nordic region.
In February, Södra and Vida halt sawmill production in southern Sweden for short periods due to timber shortages and record log prices. Vida reports that sawlog prices have risen by 50% over the past year, forcing a one-week stop at all twelve mills to prevent further losses. Södra introduces intermittent shutdowns to balance input costs with supply.
In May, Holmen cuts output and reduces staff at its Braviken sawmill, citing reduced profitability and difficulty sourcing competitively priced logs. By autumn, Swedish sawmills face heavy cost pressure as by-product revenue from pulpwood chips and energy commodities declines, reducing a key source of mill income.
Handelsbanken’s December Forestry Report describes the Nordic sector as undergoing one of its deepest downturns in decades. The expected recovery shifts to 2026 due to weak global demand and uncertainty in trade relations between the United States, the European Union, and China. Record wood costs, a stronger krona, and continuing sanctions on Russian timber constrain margins despite stable harvesting volumes.
Following strong industry opposition, the European Union decides in late 2025 to postpone enforcement of the EU Deforestation Regulation (EUDR). Member states and industry associations argue that its traceability and reporting rules are impractical under current conditions. The European Commission confirms that implementation will be delayed to allow revision and clearer compliance guidance.
Russia: systemic crisis and structural collapse of the forest industry
Russia’s forest sector experiences a structural downturn in 2025 as sanctions, high financing costs, and the loss of export markets push major producers into losses and capacity cuts.
Segezha Group, Russia’s leading forest-based company, reports declining revenue and widening losses during the year. In September, the company announces a reduction of 350 jobs at its Novoeniseysk sawmill in Krasnoyarsk Krai, citing cost optimization after losing access to European markets and facing price pressure from Chinese buyers.
Ilim Group chairman Zakhar Smushkin describes the situation as an “ideal storm” caused by multiple overlapping factors. Sanctions have sharply limited access to international markets, leaving Russian producers dependent on domestic demand and exports to China. Overproduction in China has reduced pulp and paper mill utilization to 60–70% of capacity, creating excess supply and falling prices. Trade tensions and weak demand in China further depress export revenues.
Domestically, mechanical wood processing, including lumber, plywood, and panels, remains stagnant due to the slowdown in China’s construction sector. This disrupts chip and pulpwood supply for pulp mills and increases the distance to available raw material sources.
Monetary and cost factors intensify the downturn. The Bank of Russia’s key rate reaches 16 % by December 2025, raising borrowing costs for investment projects. The ruble’s appreciation reduces export revenue, while rail and energy tariffs grow faster than inflation. Forest lease fees are recalculated retroactively, increasing costs by over 70% for long-term contracts.
Production economics remain uncompetitive internationally. Wood costs for Russian pulp producers reach $160–190 per tonne, compared with $120–130 in Brazil and $150–160 in Chile. Logistics from South America to China are now cheaper than from Russia, eroding the country’s position in its main export market. The lack of domestic machinery manufacturing further restricts modernization.
Smushkin warns that without urgent policy changes — including freezing non-tax charges, revising forest-lease rules, and stimulating domestic equipment production — bankruptcies may spread through 2026 as companies operate at or below zero profitability.