In the current global economic integration, the trade policy will stir up thousands of waves in various industries, and the cotton industry is no exception. The promulgation of this "reciprocal tariff" executive order is bound to have an impact on the entire Chinese textile and garment industry. The cotton market is an important upstream raw material of textiles. Affected by the transmission of the textile industry chain, all aspects of the cotton industry from planting, production, trade and consumption will inevitably be involved.
With the progress of the "reciprocal tariff" incident and the feedback of various countries, the turbulence is shifting from violent to gentle, many domestic financial institutions began to analyze the industry from all levels, the cotton market has the financial attributes of commodities, and many futures institutions continue to release research reports. Generally speaking, due to China's initiative to reduce imports of cotton from the United States in recent months, Even if there is no American cotton, China can still import Brazilian cotton, Australian cotton, etc., so this "reciprocal tariff" and China's countermeasures will not have much impact on China's cotton supply; However, China is the main export market for US cotton, and the 34% tariff imposed by China on US products will further increase the pressure on the US cotton sales market.
Domestic supply stability of the United States cotton sales pressure 2025 cotton planting reduction
As we all know, China is a big producer and consumer of cotton, but it still needs to import a certain amount of cotton every year to meet the huge domestic textile industry demand.
China's annual cotton production is about 6 million tons, and consumption is 7-8 million tons, so there is a gap of 1-2 million tons of cotton every year, and the gap needs to be supplemented by imported cotton.
In 2023, the United States accounted for 45% of China's imported cotton source countries, since the second half of 2024, China has taken the initiative to reduce imports of American cotton, in recent months, China's import of American cotton has declined significantly, so even if there is no American cotton, China can still import Brazilian cotton, Australian cotton, etc., in this context, China's 34% tariff on American cotton has little impact on China's cotton supply.
At the same time, increase support for domestic cotton production, improve the self-sufficiency rate of domestic cotton, such as promoting the development of Xinjiang cotton industry, improve cotton quality and output, these early efforts will have a positive effect on the stability of the cotton market this year.
From the perspective of the US market, China is the main export market for US cotton, accounting for 40% of the US cotton swab export market in 2023, but since 2024, due to the Chinese market's initiative to reduce the proportion of imports of US cotton has dropped to 7%, and the US cotton export pressure has increased. This time, China's 34% tariff on US products will further increase the pressure on the US cotton sales market, which will be bearish.
It can be predicted that the future of American cotton will be blocked exports and sales will decline. Us cotton exports are facing difficulties, and the income of domestic cotton farmers in the United States will also be affected, which will make their planting willingness to drop significantly. The National Cotton Council (NCC) expects the U.S. cotton acreage to be 9.6 million acres in 2025, down 14.5 percent from 2024. After weighing the benefits and costs of planting, cotton farmers have chosen to reduce the cotton planting area and switch to other crops with more economic benefits or lower risks, such as corn and soybeans.
The short term brings price volatility and the long term affects the global layout
But it's important to be clear that just because the supply side is small doesn't mean prices won't move.
The US tariff policy has triggered changes in the supply and demand relationship in the global cotton market, which will lead to fluctuations in cotton prices. When China imposed tariffs on US cotton, US cotton exports were blocked, the global cotton market supply was relatively loose, and prices had downward pressure. On the other hand, in order to ensure their own cotton supply, China and other countries actively explore other import channels, which may trigger a rise in cotton prices in some regions.
For China's domestic cotton market, price fluctuations increase the business risk of enterprises. It is difficult for textile companies to accurately predict raw material costs, and they are bound to become more cautious in production and pricing decisions.
From a longer time line, the US tariff policy has broken the original global cotton trade pattern, and the trade flow has significantly changed, which will have a profound impact on the global layout of the entire cotton market.
At present, the relevant parties in the cotton industry need to pay close attention to policy dynamics and actively adjust strategies to adapt to the new market environment and achieve sustainable development.
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