Reviewing Textiles and the Tariff Tantrum
May 14, 2025 The United States-China trade deal has led to positive reactions by global financial markets, but uncertainty persists. 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 like India.
The U.S. cotton market must look for new markets and new products. Chinese textile and apparel products coming into the United States will be more expensive than those from competitors like India, Bangladesh, and Vietnam. Given the less competitive nature of Chinese products, it may not be importing as much cotton from the U.S, as it did before.
Keith Lucas, Vice President for Marketing at Plains Cotton Cooperative Association stated, “The U.S. cotton industry must look for other markets. India might offer new opportunities.”
India expects to double its textiles and apparels exports from (US)$44 billion to (US)$100 billion by 2030. Its strength is in cotton apparels and home textiles. India must enlarge its fiber base, and the United States has opportunity to engage with the Indian textiles sector.
The Indian spinning sector is lobbying with the government to remove the 11% import 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 United States and India will open 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 as the U.S. and Chinese high-level delegations were meeting in Geneva. I opined in my talk that zero tariff is impossible with China and that the tariff may come down to the 30-60% range.
Per the current agreement, the United States will be imposing a 30% tariff on imported goods from China as well as 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%, 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% tariff on imports from the United States while still retaining the 15% tariff it imposed prior to April 2, 2025. If China will retain its existing base tariff on cotton from the United States, the import duties for U.S. cotton will be higher depending on the base rate.
“Chinese import duties on cotton are complex and complicated,” stated a U.S.-based cotton economist. The base rate can vary between 0 and 40% depending on licenses, nature of manufacturing units, and more. China’s input costs will rise, which will make its textile exports uncompetitive, opening doors for other textile exporting countries.
India’s export opportunities in textiles and apparels will significantly increase not only due to the space vacated in the United States by China, but also due to zero tariff regime for textile exports to the United Kingdom.
With its emphasis on quality, timely delivery, effective outreach, and engagement with India and other markets, the U.S. cotton sector can be optimistic for the emergence of a new market landscape and value-added sustainable products.
Opinions and statements expressed are solely those of the author.
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