One year after the Trump administration’s “Liberation Day” tariff announcement, the global cotton and apparel trade landscape continues to recalibrate in unexpected ways. What began as a policy shift aimed at reducing reliance on China has instead triggered a broader reshuffling of sourcing strategies, with countries like India, Vietnam and Bangladesh facing shifting tariff pressures of their own. At the same time, brands and retailers have meaningfully reduced their dependence on China, while macroeconomic aftershocks from Covid, ongoing geopolitical tensions and volatile input costs continue to ripple through supply chains.
Against this backdrop, the cotton market has emerged as a relative source of stability—buoyed by ample global supply, rising production in markets like Brazil and increased efficiency in China. Still, uncertainty looms. From the conflict in the Middle East spiking up polyester prices and constraining energy sources to looming sustainability demands pushing traceability to the fore, sourcing executives are navigating a complex, fast-moving environment.
Here Jon Devine, Cotton Incorporated’s senior economist, highlights how these forces are reshaping cotton’s role in the global market and what it all means for sourcing, pricing and demand in the years ahead.
HGI: One year after Trump’s Liberation Day tariff announcement, what stands out to you about the impact of this change to U.S. trade policy?
JD: Initially tariffs were all tilting the playing field away from China, and encouraging some alternatives such as India, with its large labor force and potential to really increase its apparel exports. But as we look at how policy unfolded, we see India paying higher tariffs than China, and China paying tariffs that are relatively similar to Vietnam and Bangladesh. The playing field has been tilted, and some other countries that we thought would have been safe actually ended up being not so safe.
But we have seen reallocation; sourcing from China decrease about 20% in 2025 relative to where it was in 2024.
HGI: Speaking of India. How have the dynamics changed for that country in terms of both producing and buying cotton over the last year?
JD: India is a really important cotton country. They’re the world’s second largest grower, the world’s second largest spinner, and they’ve also been undergoing a really important transformation. Going back 10 or 15 years, India was a major exporter. But if we take a look at the situation now, India has evolved into a more definitive role as an importer of cotton. India has imported record volumes recently, bringing in about 3 million bales. Ten to 15 years ago, India was exporting about 7 million bales. So that’s a big reversal in terms of their role in the cotton industry, from being a source of supply to being a source of demand.
India removed, at least temporarily, some of the tariffs they had on cotton fiber imports that were traditionally there to help protect or insulate their domestic cotton producers. But now that they’re evolving into an importing country, we may see those tariffs go away on cotton fiber imports over the longer term.
HGI: Are there other countries that have seen a dramatic shift in either production or consumption or both?
JD: A major story that is evolving now is China. China is really important to the global cotton industry — the number one producer, number one spinner, and traditionally, the number one importer. But over the past 10 or so years, their cotton yields have gone up about 70%. So, they’re getting almost twice as much fiber production out of the same amount of land. It’s pretty remarkable. Also dominant in terms of the pricing situation over the past few years is that China has also been importing a lot less cotton fiber.
Another important piece of the supply situation has been the growth in production out of Brazil. They’ve tripled their production over the past 10 years, and that increase in production is something that has helped prices stabilize recently, despite all the volatility and tariffs.
HGI: As we look at the cotton market, how is Covid still influencing some of what we’re experiencing today?
JD: The macro-economic volatility is part of it. When you take a look at apparel import volumes in the U.S., we had a tremendous pullback initially, and then we had the surge with the stimulus. Since then, we’ve had ripple effects. Coming out of stimulus, as we pulled back due to inflation and higher interest rates, we saw a big pullback in apparel shipment volumes. And then as we evolved from that inventory correction, we had some surges and imports ahead of tariffs here in 2024. The volume of change continues to be tremendous; we’re still somewhat adjusting and trying to get back to some sort of stable environment after covid.
HGI: ‘Stable’ seems out of reach, especially today with the war in Iran. And as a result, we’re seeing polyester prices shoot up. Is there a message in what’s happening right now for sourcing and supply chain executives?
JD: Something to maybe take a little bit of comfort in is the stability, or at least relative stability, that we have had in the cotton market over the past couple of years. It is kind of amazing given cotton’s exposure to global markets. We are the second most widely traded agricultural row crop commodity after soybeans, in terms of the percentage of the crop that’s traded internationally every single year. But then, on the apparel side, we’re bringing in 98-plus percent of all of our apparel in import form every year. So, this trade policy has a tremendous ability to affect the cotton market, but we haven’t really seen much movement in cotton prices.
We do have available supplies. Take a look at exportable cotton that is available for the international market. We’ve been setting records or hovering around records over the past couple of years, and we’re expected to be near that level, even as we get further out into the 26/27 crop year — the harvest being planted now in the U.S. and other northern hemisphere countries. So, the supply is there. It’s been a source of calm for the market despite the exposure at the fiber level.
There has been an uptick in cotton prices recently. But looking at cotton trade, there has been less exposure to the Persian Gulf situation than what you see is for polyester and other synthetic fibers derived from oil.
HGI: Looking ahead to 2028 collections, are you anticipating an uptick in demand for cotton as a direct result of what’s happening with polyester?
JD: Potentially. We’ll have to see how this whole conflict situation evolves. But I think the longer that it’s in play, the tighter the oil supply chain could be in a lot of countries in Asia where there is a lot of dependence on those supplies coming out of the Persian Gulf.
HGI: How would you characterize the competitiveness of U.S. cotton right now?
JD: U.S. cotton producers are some of the most sustainable, most efficient producers around the world, and they tend to have some choices between which crops they’re going to plant. So, there is some responsiveness there to the market, which can be helpful at times. There are a lot of good arguments for U.S. cotton from those standpoints, but something that could be increasingly important is every bale of cotton produced in the U.S. is classed by the USDA. As part of that classing process, every bale is assigned a permanent bail identification tag, which allows that cotton to be traced all the way back to the gin. And traceability is a feature that’s going to be increasingly important, and it’s going to be a value add for U.S. producers.
Something that we would like to see is more equality in terms of the playing field. If we’re trying to prove cotton traceability back to the gin or back to the farm or back to some real tight regional location, why aren’t we asking the same thing on the polyester side? Are we going to ask what oil field the polyester was derived from? If it came from some sanctioned oil field in Russia or Iran? Once we get the other side playing by the same set of metrics, we get a more fair comparison regarding sustainability measures with cotton relative to polyester.
HGI: With so much volatility, it seems the market is a little cautious right now. What are some knock-on effects to that?
JD: It can affect, of course, cotton demand. We have seen some strengthening of cotton prices over the past couple of months. We’ll see if we’re going to be able to hold on to those or not, and that would depend, of course, on how strong the buying side is. That will be determined in part by how strong order placement is over the next several months as well. So caution can ripple through in terms of supply chain pricing, but that’s got to be balanced with all the uncertainties and some of the risk premiums that might be in the market because of this changing environment.
