U.S. cotton exports are being remolded by geopolitical changes, experts say, as shipments to China plummeted by 90 percent in the first half of the year, yet ticked up in other Asian markets such as Pakistan, Turkey and Vietnam, the last of which saw a threefold increase.
The numbers, provided by data firm LSEG, are a reflection of the White House’s tariff policies and the tit-for-tat response they have engendered, said Sheng Lu, professor of fashion and apparel studies at the University of Delaware. While President Donald Trump’s eye-watering 145 percent duty on Chinese goods has since been negotiated down to 30 percent, China has already been red-flagged by U.S. fashion companies for trade relationship risks, leading 80 percent of executives surveyed by the U.S. Fashion Industry Association this year to report plans of reducing apparel sourcing from the country.
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Meanwhile, China’s retaliatory tariffs against U.S. cotton, which were 15 percent in March and increased to an additional 125 percent in April, have “almost halted” China’s cotton imports from the United States, Lu said. With a 90-day extension on the two nations’ tariff truce, originally poised to end in early September, the current 10 percent moratorium rate in China isn’t a long-term bet.
“Given the ongoing concerns about the bilateral trade relations, we might see the U.S.-China cotton apparel supply chain continue to decouple in the years ahead,” he said.
Lu also pointed to a U.S. Department of Agriculture Foreign Agricultural Service report, published in May, that indicated that Beijing’s subsidies for cotton grown in the controversial Xinjiang Uyghur Autonomous Region, plus a spate of clement weather that has resulted in bumper yields, have also muted China’s demand for U.S. cotton.
The decline might appear especially acute because of stockpiling of U.S. cotton by the Chinese government in 2023 and 2024, said Jon Devine, senior economist in the corporate strategy and program metrics division at Cotton Incorporated, a nonprofit that promotes cotton growers in the United States through research and marketing. He said that the large year-over-year decrease is due to going from an exceptionally strong year to one that’s more restrained.
“Something else that’s out there in terms of the cotton trade landscape is the increase in production that’s been coming out of Brazil,” he said. “Brazil has passed us as the No. 3 producer, and they passed us as the No. 1 exporter. But even with this rise of Brazil, their exports to China were down over 60 percent year over year for the crop year that just ended. So the pullback from China is affecting all shippers, including the U.S.”
Even so, the United States was affected a “little bit more disproportionately,” which is something Devine expected. The commodity world is particularly price-sensitive. If U.S. products are costing more, that’s going to make them a harder sell in China.
Why other countries are snapping up more U.S. cotton, on the other hand, is harder to peg. Devine said it could be a way to curry favor with the Trump administration—Bangladesh is certainly going that route and perhaps India as well—or a strategy to stave off allegations of illegal transshipment. Vietnam, to name one example, relies heavily on thread and fabric from China. While downstream demand has overall been soft in recent years, he said, diversification is helpful for farmers to “get sales out there” and stabilize inventories.
“There’s bound to be some reshuffling of the deck,” Devine said. “If U.S. sales to China are getting squeezed, that’s going to result in some spilling over into other markets. I think that’s that’s one main reason why we’re seeing some of the sales come over.”
