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We're sorry to hear you're having this issue.
Apologies, what tool are you using exactly?
Are you using an axe or pickaxe, etc?
Get back to us when you can.
Regards,
Team17 Support
Exact same happened to me. No tool or weapon inflicted any damage.
Was In multiplayer session - host restarted the game -and everything worked again after that.
Br
I restarted my game and handaxe is doing nothing. Restarted again. Still nothing.
I can't see anything about it being resolved besides restarting