On March 3, 2025, the US government announced that it would impose a further 10% tariff on all Chinese goods exported to the US on the grounds of fentanyl. In response, on March 4, the Tariff Commission of the State Council of China issued an announcement that from March 10, 2025, additional tariffs would be imposed on some imported goods originating from the United States, including a 15% tariff on cotton. This series of measures has triggered a "domino effect" in the cotton market and has a potential impact on the chemical fiber industry.
The United States is one of China's important sources of cotton imports. In 2024, China's total imports of US cotton reached 880,000 tons, accounting for 33% of total imports. However, the additional tariffs have significantly increased the cost of US cotton entering the Chinese market and weakened its price competitiveness. On the one hand, the cost of importing cotton for Chinese textile companies has increased, which may prompt companies to look for other alternative sources, such as cotton from India, Brazil and other countries. On the other hand, the export orders of US cotton to China have dropped sharply, which has blocked the overseas sales channels of US cotton.
From the perspective of the global cotton trade pattern, China's countermeasures of imposing tariffs on US cotton are reshaping the global cotton trade pattern. Brazil's cotton industry is booming, and its high quality and cost-effective characteristics are enhancing the substitution effect on US cotton. According to the February Global Cotton Report of the U.S. Department of Agriculture (USDA), Brazil's cotton production in 2024/25 will reach 3.701 million tons, a year-on-year increase of 529,000 tons, and exports are expected to reach 2.787 million tons, a year-on-year increase of 107,000 tons. Brazil has officially replaced the United States as the world's largest cotton exporter.
