Jasmin Malik Chua
Far from “America First,” U.S. cotton appears to be on a losing streak—at least, as far as the country’s foremost trade nemesis is concerned.
Writing in a report late last month, the U.S. Department of Agriculture Foreign Agricultural Service, or FAS, said that U.S. cotton exports to China plummeted by 73 percent to 151,000 metric tons in the seven months between August 2024 and February 2025, collapsing America’s previous 29.6 percent market share to just 17.1 percent. Once U.S. cotton’s top buyer, China is now its fourth after Pakistan, Vietnam and Turkey.
While anti-American sentiment amid fraying trade relations is one reason for the dramatic decline, a bigger one, according to the FAS, is the “excellent weather” that resulted in bumper harvests in the Xinjiang Uyghur Autonomous Region, which contributed 92.3 percent of China’s cotton this marketing year, a tad higher than the previous 90.9 percent. Despite U.S. restrictions on products of Xinjiang origin through the Uyghur Forced Labor Prevention Act, along with mounting global antipathy toward the same because of concerns over a Muslim crackdown, the region’s cotton saw a 10.8 percent increase in production and an almost 100 percent trade uptake by the end of March.
“Xinjiang’s higher yields compared to the national average demonstrate the region’s advantageous environment, large-scale farming enterprises and high rates of mechanization,” the FAS said. “China continues to invest in cotton breeding and research and mentioned improving cotton quality as a goal in its 2025 Number One Document.”
China, if anything, only appears to be doubling down on the province, with production outside Xinjiang expected to fall further “due to limited subsidies, lower cotton prices, reduced quality, higher input costs and competition from alternative crops,” the FAS wrote.
In December, the China Cotton Association raised its estimate for Xinjiang’s cotton production to 6.1 million metric tons, reflecting a 10.8 percent year-on-year increase that will account for almost 95 percent of the national output by this time next year. Industry contacts similarly expect ginned cotton volumes in the region to increase from the 6.39 million metric tons yielded this past marketing year, itself an 18.9 percent uptick from the year before.
“In contrast, the Yangtze and Yellow River regions show declines due to limited mechanization, higher labor costs and lack of price support policies, with the National Monitoring System reporting the steepest drop in these regions,” the report said. “Several industry sources did share that the high concentration of cotton production in Xinjiang poses a challenge for industrial development and that to mitigate the risks, there should be efforts to gradually restore and maintain cotton production in inland areas. However, the latest surveys do not show any sign of the restoration.”
There’s also the fact that China continues to subsidize the relocation of yarn and textile manufacturers from other regions of the country to Xinjiang. The FAS cited a local news article that said that Xinjiang’s spinning capacity reached 29.1 million spindles with 62,400 looms in operation, both of them historic numbers. Spinning capacity is expected to increase further as the Xinjiang government plans to spin 45 to 50 percent of Xinjiang cotton by 2028, “with the goal of developing Xinjiang into a global textile hub,” the FAS added.
Coupled with a recent Xinjiang Cotton Industry Development Leadership Group meeting that emphasized accelerating the construction of the China Cotton and Cotton Yarn Trading Center, developing a “Xinjiang Cotton” public brand certification system and broadening export markets in Southeast Asia, Central Asia and Eastern Europe under the Belt and Road Initiative, Xinjiang will maintain its “dominant position” in China’s cotton supply, potentially reducing its need to import during the 2024-2025 marketing year, while “developing more export-oriented textile manufacturing to offset challenges in traditional markets like the United States,” the FAS said.
Another impediment for U.S. cotton is growing competition from Australia and Brazil, which captured a respective 26.1 percent and 45 percent of China’s market share in the most recent marketing year. Chinese spinners, the FAS said, consider their fibers of comparable (in the case of Australia) or improving (Brazil) quality in key performance indicators such as fiber length, tensile strength per unit linear density and grade level. Their competitive pricing doesn’t hurt, either. Brazilian cotton prices were roughly 14 percent lower than U.S. cotton prices during this period.
Looking ahead, the report said, Australia and Brazil are expected to maintain their positions as the Chinese market’s primary cotton suppliers for the rest of the 2024-2025 marketing year, especially if it wants to continue to fulfill textile orders from third-country suppliers looking to shun Xinjiang cotton, whether due to UFLPA compliance or otherwise.
But also not helping are the Trump administration’s trade provocations. The report predicted that Beijing’s imposition of 140 percent tariffs on U.S. cotton will “all but stop further imports from the United States.” Statistics from bonded zones at Chinese ports indicate that domestic importers have been actively liquidating U.S. cotton stocks in recent months—and replacing them with their Brazilian counterparts—to sidestep tariffs.
That U.S. tariffs of 145 percent, plus the closure of the so-called de minimis “loophole,” will also reduce Chinese textile exports of non-Xinjiang textiles and finished apparel to the United States might provide some cold comfort. The hit isn’t unsubstantial: In 2024, textile exports to the United States accounted for 10.7 percent of China’s total textile exports, valued at $14.8 billion, and 22.7 percent of China’s total apparel exports, or $36.1 billion’s worth. And while large-scale textile and apparel companies in China have been transferring some production to Southeast Asia, smaller firms with limited resources may “struggle to adapt,” the FAS said.
Without the easing of the trade brinksmanship, however, the already high-stakes battle between U.S. and Xinjiang cotton will only intensify, perhaps even spill into third-country markets as Chinese garment manufacturers shift toward exporting to non-U.S. markets due to the tariff turmoil, said Sheng Lu, professor of fashion and apparel studies at the University of Delaware.
“Notably, while the UFLPA has effectively driven most Chinese cotton out of the U.S. market, China has ‘shielded’ Xinjiang cotton through increased subsidies and recent retaliatory tariffs on U.S. cotton,” he said. “We can expect heightened competition and growing tensions between U.S. cotton and Xinjiang cotton, along with a more turbulent global cotton market shaped by geopolitics and trade policy.”