In a sourcing landscape where nearly everything is uncertain and there’s little telling when any semblance of certainty will evaporate, cotton has been a silver lining of relative stability.
“Calm” is the word Cotton Incorporated senior economist Jon Devine used to describe the current market.
“If you rewind back to some of the surprises we had in early April, in terms of the magnitude and breadth of some of the tariff announcements that came out, you saw stock indexes like S&P 500 move up and down about 15 percentage points, while the cotton market moved up and down maybe five percentage points,” he said. “In terms of price movement, that’s only three to five cents per pound. So the cotton market has been a really calm place despite all this volatility we’re experiencing in the world right now.” Cotton futures were trading around 65.0 cents per pound at publication time.
But that doesn’t mean the industry is standing still. Behind the scenes, brands, suppliers and regulators are navigating a complex mix of shifting trade relationships and traceability that could reshape how cotton is sourced and sold.
Here, Devine walks us through where things stand and where they’re (likely) headed.
HGI: Let’s start with a broad view. How have recent trade and labor laws, like the Uyghur Forced Labor Prevention Act, impacted cotton sourcing?
JD: Staying on the theme of silver linings out there, one of them is that the market was somewhat prepared for this because of issues associated with the Uyghur Forced Labor Prevention Act that have been in place for some time. If you take a look at where tariffs are the highest—at least where they were threatened in the spring—they’ve been centered on China. The Uyghur forced labor protections had helped force sourcing for cotton products to be more diversified even before we came into this current tariff situation. That’s probably something that’s beneficial there as opposed to what’s been happening on the manmade [fiber] side, where, of course, you have a lot of concentration of polyester production and polyester apparel coming out of China.
HGI: Where are you seeing most of the uptick as companies reduce their reliance on cotton products from China?
JD: We see some growth coming from Bangladesh and Vietnam. Of course, that’s going to be amplified more recently.
HGI: How are companies navigating the increased compliance burden when importing cotton products into the U.S.? Is it deterring trade at all?
JD: I think it depends on where you’re sourcing and how deep you want to go into your tiers of suppliers. At the yarn level or the spinning level, when you take a look at the global trade system, there’s not a lot of Chinese fiber that’s being exported. You go one step further down the supply chain, yarn going into fabric, there’s some Chinese yarn that’s exported but the volumes aren’t tremendous. Where things really start getting more complicated and more worrisome is when you start taking a look at fabric where, of course, China is really dominant in terms of global fabric production, and they do export a lot of cotton fabric. So if there are concerns about potential for exposure to product being associated with Xinjiang, the risk goes up significantly when you start looking at Chinese fabric, as opposed to other earlier stages in the supply chain.
But if we take a look at the CBP data in their dashboard, some of their seizures have gone down over time—and I think that’s true on third party countries, too—so that’s something else that can be tracked relative to concerns around Xinjiang.
“The greater concern in the cotton market is what’s going to happen to the overall size of cotton import demand or apparel demand?”
—Jon Devine, Cotton Incorporated
HGI: Has the added scrutiny over sourcing and customs compliance had a noticeable effect on U.S. cotton prices or demand recently?
JD: There’s a couple factors that really have been driving the price movement. If you rewind the clock and take a look at cotton prices, in February 2024 cotton prices hit $1. Where we are right now is a very different environment, with prices down about 30 percent relative to where we were then. When I look at the factors that most strongly contributed to that collapse in prices, one of them is that China pulled back from the market. I think China was potentially setting itself up for some changes in the trade environment. If we go back to that time period in the ’23-’24 crop year, which would include that last run in prices, China was importing a lot of cotton. They brought in 15 million bales. And just for context, that’s more than what the U.S. has grown in recent years. So China was out there buying a lot of cotton. There were some concerns of scarcity and that helped bring the prices up pretty significantly.
China was buying, in part, through its reserve system, so it was government purchasing rather than mill-led buying or downstream related buying, and once they filled up, they pulled back. Chinese imports have dropped from 15 million bales to levels closer to about 6 million bales; that’s a huge reduction on demand. On top of that, we’ve had some increases in supply. [A lot of U.S. cotton production comes from] West Texas. There’s not a lot of irrigation in West Texas. West Texas is cowboy country, it’s dry. We’re dependent on rainfall and the rain hasn’t been coming in recent years, though it has been getting a little bit better. After we came through that period of China’s aggressive buying, we have seen U.S. crop get bigger, some of the higher prices brought in more acres for the harvest that we’re selling right now. The U.S. crop this year is about 2 million bales bigger than it was back then, so we’ve got more cotton to sell.
Then on top of that, Brazil continues to produce more record harvests and Australia continues to have decent crops. West Africa has decent crops. These are all of our major cotton exporting centers, and the combination of China pulling back on the import front from the demand side, and these other countries growing more, has pushed the market lower. For the price outlook, something that’s important is that this cotton coming in, if it’s looking for a buyer and hasn’t been able to find one, that cotton doesn’t disappear, it’s been in storage somewhere, and we have had some build up of cotton stocks.
With the outlook of continued sluggishness in Chinese demand, a continued availability of exportable supply from these key supply markets, and the warehouse supply that’s already there, it should keep prices relatively low and stable as we go out to the future.
HGI: And how are things shaping up where cotton traceability is concerned, particularly as the importance of that can’t be overstated given the compliance risk?
JD: The U.S. is unique in that every single bale of cotton has a bale tag associated with it. This bale tag gives you quality information, but it also gives you some origin information, too. So the bale tags are issued specifically to the cotton gin, and when they’re brought to the spinning mills, the spinning mills can process the cotton and still have those tags that can potentially trace back to gins. The challenge is, once you get to spinning mills, you may have cotton from different origins. It could be different places throughout the U.S. you have in your lay down, usually it’s about 40 to 50 bales being drawn upon to feed the spinning machines, so you can get some blending there. And in each stage further down the supply chain there can be other blending, too. You may be buying yarn from different sources. Maybe the fabric could come from different sources, too.
But the demand [for traceable cotton] should be there. If you do want to make any claims about sustainability and you want to back them up, you are going to need traceability as a counterpoint to that. That hasn’t gone away. Something else that might be interesting to track with the cotton market is if we do see some sort of emphasis on where cotton has grown to support economies. If there are some claims that want to indicate that the cotton in your garment was grown in the U.S., that could add another element to traceability, or another level of importance for traceability beyond sustainability.
HGI: How do you think evolving trade policy might continue to reshape the cotton supply chain, especially for U.S. growers and suppliers?
JD: It just remains to be seen. I don’t know if these trade deals are really going to be oriented on trade deficits. Obviously, we export a lot of cotton, so one way to improve a trade deficit we might have with a particular country could be to export more cotton over there. But one challenge for that is, if you’re exporting raw fiber and importing finished garments, there’s a lot of value added that occurs there, too, so that equation could still be a little bit skewed. The greater concern in the cotton market is what’s going to happen to the overall size of cotton import demand or apparel demand? If we are seeing prices increase, is that going to shrink the pie? And if it shrinks the pie, that’s something that could have negative consequences for cotton prices and also for our exports.
HGI: Do you think that future trade agreements could intensify restrictions on cotton inputs and, if so, what would that mean for U.S. cotton trade?
JD: I don’t know if there will be restrictions but there could be encouragements for certain origins. We’ve already seen from the Administration in their executive orders some encouragement for U.S. content. In the April 2 Liberation Day announcements, there was a paragraph indicating that if product has at least 20 percent U.S. content by value, it’s eligible for some tariff discount. There’s some other legislation that has been introduced—the Buying American Cotton Act of 2025 was introduced in the Senate not long ago. If we do see further encouragement in terms of looking for U.S. content, that’s something that could potentially show up in terms of changing origins. So maybe not so much restrictions, but maybe some favoring.
HGI: What are you hearing from companies about how they’re navigating all of this?
JD: I think the hard thing is just knowing what to do because we don’t know what the landscape is going to be, and it keeps changing—and it’s changing in non-trivial ways. When you’re saying tariffs change by 10 percentage points, that’s really meaningful, we’re looking at millions of garments. If that can change overnight, it’s hard to plan. So, navigating uncertainty is the number one challenge.
HGI: Looking ahead, what should we expect for cotton prices?
JD: Obviously, we’ve had some periods when cotton prices have been very volatile, but in this volatile environment, cotton is holding up stable. We are offering prices that are pretty severely discounted compared to where they were just a couple years ago. The decreases in raw material prices—and, most notably, the big decreases we’ve had in cotton fiber prices—have some potential to help offset some of the effects of tariffs.
