By Chris Prentice

Turkey has slapped anti-dumping duties on U.S. cotton imports, a U.S. industry trade association said on Monday, fraying relations between one of the world's top fiber growers and one of its biggest customers amid weak global prices and demand.

Imports on a cost, insurance and freight (CIF) basis will incur dumping duties of 3 percent effective immediately, the NCC said, the first official confirmation of the move.

The decision to introduce tariffs has been widely expected since Turkey's Economy Ministry said in February that U.S. cotton was hurting the country's domestic industry.

The NCC vowed to fight the move through the World Trade Organization and Turkish courts, and warned it put U.S. cotton at a competitive disadvantage to other countries and jeopardized U.S. business with Turkish mills.

Turkey is the second-biggest buyer of U.S. cotton, with shipments ranging between 1.5 million and 2 million bales per year.

Still the tariff is lower than expected after Turkey detailed in a February report anti-dumping margins in a wide range for firms shipping to Turkey. Those margins ranged from 3.14 percent for Cargill Co to 7.91 percent for LD Commodities Cotton LLC, a division of Louis Dreyfus Commodities.

The less prohibitive levels offered relief to some. They were expected to slow shipments to Turkey, without halting them entirely.

"It's not great for business, but it could have been worse," said Jordan Lea, chairman and co-owner of Eastern Trading Co in Greenville, South Carolina, and a board member for the National Cotton Council of America.

U.S. cotton prices have been under pressure from huge global inventories as demand for manmade fibers like polyester has stolen market share.

China, the world's largest consumer of cotton, announced plans on Friday to start its annual reserve sales in a bid to cut down its massive stocks. (Reporting by Chris Prentice and Josephine Mason; Editing by Leslie Adler, Bernard Orr)