10 April 2025
Since early March, the United States has continued its tariff war with major trading partners. In response, Canada, China, and Mexico have implemented retaliatory measures.
Particular attention has been drawn to the escalating confrontation with China. Recently, President Donald Trump decided to raise tariffs on Chinese goods from 84% to 125%. In reality, the total burden reaches around 145%, as the new tariffs are compounded by earlier 20% duties imposed on Chinese imports.
In retaliation, Beijing has approved an increase in counter-tariffs on U.S. goods from 34% to 84%, extending the list to include raw cotton and other agricultural products. This poses a serious threat to American farmers, as China is expected to be the world’s largest cotton importer in the 2024/25 season, with imports estimated at 1.7 million tonnes, representing 20% of global cotton trade.
Mexico, which imports approximately 195,000 tonnes of cotton (around 2% of global imports), traditionally all from the U.S., may also shift its sourcing. It is worth noting that in the past three seasons, China accounted for 34%, and Mexico for 5% of total U.S. cotton exports.
With Brazil, Australia and Argentina all reporting strong harvests and substantial stock levels this season, China has the flexibility to reduce cotton imports from the United States. As a result, U.S. cotton growers are unlikely to benefit from President Trump’s trade policy, as even disregarding this fact – after nearly two centuries of dominance as the world’s leading cotton exporter, the U.S. was overtaken by Brazil last season — a trend that continues. As American cotton is pushed out of key markets such as China and Mexico, the U.S. will need to seek new buyers.
While the overall volume of global cotton trade may remain stable, the current disruptions are expected to result in higher costs for consumers and lower prices for producers.
(Source: DNFI, Cotton Outlook)