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The U.S. – China trade deal has led to positive reactions by global financial markets, but uncertainty persists—and uncertainty is not good for business in terms of expansion and investments. Given the current scenario, China comes out to be a loser in the emerging textiles trade landscape, while providing opportunities for other textile manufacturing powerhouses such as India.
The U.S. cotton market must look for new markets and new products. Chinese textile and apparel products coming into the U.S. will be more expensive than its competitors like India, Bangladesh and Vietnam. Given the less competitive nature of Chinese products, it may not be importing cotton from the U.S. as it did before the current trade situation.
Keith Lucas, vice president for marketing at Lubbock-based Plains Cotton Cooperative Association says, “The U. S. cotton industry must look for other markets; India might offer new opportunities.” India expects to double its textiles and apparels export from $44 billion to $100 billion by 2030.
Its strength is in cotton apparel and home textiles. India must enlarge its fiber base and so the U.S. has opportunity to engage with the Indian textiles sector. The Indian spinning sector is lobbying with the government to remove the 11 percent duty on cotton imports. While total removal may not be possible, any reduction in the import duties will be beneficial for cotton exporting countries.
The proposed trade deal between the U.S. and India will open-up doors as the U.S. government is keen to capture the Indian market for its agricultural products. I had an opportunity to present an invited talk on “Trade in the new global era,” for the North India Section of The Textile Institute [NISTI-REGD] on the same day that the U.S. and Chinese hi delegation was meeting in Geneva. I suggested in my talk that zero tariff is impossible with China, and the tariff may come down to the 30-60 percent range.
Per the current agreement, the U.S. will be imposing a 30 percent tariff on imported goods from China in addition to maintaining existing tariffs before April 2, 2025, including Sections 301 and 232 tariffs. The effective import duties for Chinese products will be more than 50 percent, which will make them uncompetitive against textile and footwear products from India and other major exporters of these products.
China has agreed to impose a 10 percent tariff on imports from the U.S. while still retaining the 15 percent tariff it imposed prior to April 2, 2025. If China will retain its existing base tariff on cotton from the U.S., the import duties for U.S. cotton will be higher depending on the base rate.
“Chinese import duties on cotton are complex and complicated,” according to a U.S.-based cotton economist. The base rate can vary between zero and 40 percent, depending on licenses, the nature of manufacturing units and other factors. China’s input costs will rise, which will make its textile exports uncompetitive. This opens doors for other textile exporting countries.
India’s export opportunities in textiles and apparel will significantly increase, not only due to the space vacated in the U.S. by China, but also due to a zero tariff regime for textile exports to the U.K. The U.S. cotton sector, with its emphasis on quality, timely delivery, effective outreach and engagement with India and other markets, can be optimistic for the emergence of a new market landscape and value-added sustainable products.
Dr. Seshadri Ramkumar is a professor in the Department of Environmental Toxicology and The Institute of Environmental and Human Health, Texas Tech University, and a regular contributor to Textile Technology Source. His lecture on “Trade in the New Global Era,” can be viewed here: https://www.youtube.com/watch?v=NnEP3umOlIY