Historical import situation of U.S. cotton by China

In recent cotton marketing years, China's imports of U.S. cotton have consistently accounted for over 35% of total imports, with import volumes typically exceeding 500,000 tons. However, during the 2018/19 marketing year, amid the U.S.-China trade war, China's imports of U.S. cotton fell to 365,000 tons, representing only 18% of total imports, marking a historical low. In the same year, the proportion of Brazilian cotton imports surged, rising from 7% in the 2017/18 to 24% in 2018/19, and it has maintained a high proportion in the subsequent years.

As of February 20, 2025, the U.S. cotton export sales to China has totaled about 190,000 tons, and the total export shipments were 130,000 tons. According to the statement, goods that have been shipped from the origin before March 10, 2025, and imported between March 10 and April 12 will not incur the additional tariffs specified in this statement. Therefore, if the remaining sold but unshipped 60,000 tons of U.S. cotton begins shipping before March 10, it will not be subject to additional tariffs, while export sales signed and shipped after that date will be affected.

In terms of the Chinese domestic situation, the increase in tariffs on U.S. cotton by China may lead to a rise in the basis for U.S. cotton at ports in short term, while the reduction in imported U.S. cotton will affect the volume of imported cotton in the future. The domestic medium-term supply may improve, but in the medium to long term, the imports of Brazilian cotton, Australian cotton, and imported yarn can meet that demand. More importantly, the key influencing factor will still be the actual performance of end-user demand.

Regarding U.S. cotton, although it is already anticipated that the export sales of U.S. cotton to China will be low this season, the increase in tariffs has led to a further decline in the potential for export sales, weighing on ICE cotton futures market. Additionally, considering the historical trade frictions between China and the U.S., if the U.S. continues to escalate tariffs, it is possible that China may further increase the tariff rate on U.S. cotton.