TEXTILES.ORG
On March 19, 2025, Jerome Powell, chair of the U.S. Federal Reserve Board, indicated tariffs have partly played its role with elevated inflation, which is at 2.8 percent, with the federal interest rate remaining at 4.25-4.5 percent. Referencing tariffs, Powell said, “they tend to bring growth down, and tend to bring inflation up.”
This will influence consumer spending. Surveys indicate consumer confidence is down, which in turn will affect the buying of non-essential items, as these depend on discretionary spending. On March 20, 2025, Bank of England also chose to maintain the current interest rate at 4.5 percent, while its domestic economy is weak. Again, the global economic uncertainty due to the tariff situations has weighed heavily in decisions to maintain the current interest rate.
The U.S., China and India, countries with sizeable middle-class populations, have interests in textiles as they engage in exporting and importing fibers and textiles. The U.S. is the largest market for consumer goods, and its economy matters for global trade. While the U.S. economy is on a strong footing, the growth this year will be slightly less than expected at 1.7 percent. According to Powell, the growth in the next two years will be slightly less than 2 percent.
The tariff situation, consumers’ spending power, and, more importantly, confidence will determine the amount of trade in textiles and apparels. As textile manufacturing is labor intensive with smaller margins, the tariffs are not at a level to shift the manufacturing of commodity textiles to the U.S. But developed economies like the U.S. and EU are poised to grow their advanced textiles sectors. More importantly, with EU countries committing to spending more on their defense budget, opportunities in defense, healthcare and industrial textiles will grow and may support new investments.
The textiles sector’s landscape and tariffs
Trade between China and the U.S. will see some change. China’s exports to the U.S. will take a hit. Other countries such as Bangladesh, Vietnam, India and Indonesia may see a bump up in exports of apparel. However, industries with Chinese investments in Vietnam and low-wage countries would see export enhancements. China’s importing of The U.S. cotton will show a decreasing trend, which is already happening due to its weak domestic consumption. But this can be offset by exporting to other major textiles and apparel manufacturing nations. How much the shift will be is difficult to predict given the uncertainty at this time
India is currently in the fourth position as an exporter of apparel to the the U.S. It is unlikely to see a sudden shift in its ranking, but its share of exports will increase. According to the U.S. Office of Textiles and Apparel, in 2024 India exported about $4.69 billion worth of apparel, while Bangladesh exported about $7.34 billion.
Bangladesh, Vietnam, and Indonesia as importers of cotton will have constraints in exponentially increasing their manufacturing, but their appetite for cotton will grow. India is poised to enhance its apparel exports to the the U.S.
India needs to increase its cotton availability with improving its productivity. This crop year (October 2024- September 2025), the production will be about 30 million bales (170 Kgs each), which is less than last year’s production. This scenario opens opportunity for cotton exporting countries to trade with India while India maintains an 11 percent tariff of imported upland cottons. At the present times, mills are showing interest in procuring cotton from Brazil which comes out to be competitive in terms of price. The U.S. cotton sector needs to promote its cotton for its quality, timely delivery and after-sales support, although it is relatively high-priced against Brazilian cotton.
I had an opportunity to discuss cotton trade dynamics with Velmurugan Shanmugam, general manager of India-based Jayalakshmi Textiles which has recently bought Brazilian cotton for using it as a blend with Indian cotton. According to Shanmugam, balancing the cost and quality of imported cotton is a critical activity while making decisions on purchasing imported cotton. While Brazilian cotton comes out to be economical, U.S. cotton is still better in terms of nep counts, says Shanmugam.
Given the reciprocity tariff policy taking effect on April 2, textile trade with India will not be affected much as India’s basic custom duty on knitted products is 20 a percent and normally the apparel tariff differential is about 7 percent. India will be competitive against China as the U.S. has imposed 20 percent additional tariff over the existing ones, making it expensive from this point of view.
The Indian industry should utilize the opportunity to enhance its productivity and strengthen its cotton and synthetic base. Importantly, the apparel and garment sectors should increase the size of their product basket.
While it is difficult to predict what would be loss in export share of China to the the U.S., given the amount of export it has been doing in recent years, certainly other South Asian countries will benefit. This in turn provides opportunities for cotton exporting countries like the U.S. to realign its market space. In the cotton trade, Brazil remains a competitor for the U.S. to penetrate India, but it is possible with coordinated marketing efforts. In any case, the global textile landscape will shift.
Dr. Seshadri Ramkumar is a professor in the Nonwovens & Advanced Materials Laboratory Texas Tech University, Lubbock.