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Cotton And Tariffs Create Trade Tensions Between U.S. And China

• By Seshadri Ramkumar,
Texas Tech University •

mississippi river bargeContinued trade tension between the United States and China is affecting the global cotton and textile sectors.

“Back and forth on tariff discussions is problematic, and it results in the slowdown of global cotton demand,” says Dr. Gary Adams, president and CEO of Memphis, Tennessee-based National Cotton Council. On Jan. 16, Adams spoke at the Lubbock, Texas-based Plains Cotton Growers’ meeting highlighting the effect of trade tensions between the world’s largest cotton user, China and the largest cotton exporter, the United States.

China’s 25 percent tariff on U.S. cotton affects the whole supply chain. China was expected to import about 3 million bales this marketing season from the United States. The continued trade tensions have affected the cotton trade. Because of this situation, China may import less than 1 million bales from the United States, Adams says.

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Tariffs affect the general economy, and they certainly affect cotton and textile consumption, says John Robinson, cotton economist at Texas A & M University. The demand for cotton slows during recessions and in uncertain trade scenarios, unlike food grains, Robinson says.

Texas Planting Mix Uncertain

The current trade tensions between China and the United States have created concern for the 2019 cotton season.
Steve Verett, executive vice president of Plains Cotton Growers Inc., says, “Trade tensions certainly are casting some uncertainty as to the exact planting mix for farmers on the High Plains of Texas.

“There continues to be great interest in cotton production and some increase of plantings in our northern panhandle area, especially given the very successful growing season of 2018. Currently, we expect some increase in cotton plantings for 2019, but relative prices for crops at planting time will ultimately dictate how much that increase might be.”

Cotton growers are hoping a forthcoming visit by the Chinese delegation to the United States may find a favorable solution to the ongoing trade tensions between the two countries. Some say there are no winners with retaliatory tariffs as they affect consumers’ interest in textile goods.

Dr. Seshadri Ramkumar is a professor in the Nonwovens & Advanced Materials Laboratory at Texas Tech University. Contact him at sramkumar@ttu.edu.