China Imposes 15% Tariff On Cotton Originating In The United States Traders Are Accelerating The Cancellation Of Cotton Orders In The United States

According to the export report released by USDA, during the week from February 28 to March 6, the annual net export sales of cotton in the current US market increased by 271800 bales (61699 tons), 13% more than the previous week and 13% more than the average of the previous four weeks. However, instead of signing the 2024/25 American cotton contract, Chinese buyers cancelled 8876 tons of American cotton contract, which is in sharp contrast to the continuous recovery of the number of American cotton signed by China in the first three weeks (from February 7 to February 27, China signed 9400 tons, 7100 tons and 10700 tons of American cotton respectively).

Some international cotton merchants and institutions said that it was expected that a large number of Chinese textile enterprises/traders would cancel the 2024/25 US cotton contracts since the first ten days of March, and with the intensification of the tariff war between China and the United States and Mexico, Canada and other countries trying to increase tariffs on Chinese imports in exchange for the reduction or exemption of US tariffs on their goods, Chinese buyers may continue to accelerate the cancellation of contracts signed this year, and the market share of American cotton in China's total imports in 2024/25 will decline significantly.

With China imposing 15% tariff on American cotton, the import cost of American cotton has risen significantly, and the cost performance of American cotton has declined compared with that of cotton from other regions. At the same time, there is little hope that the 2024/25 American cotton will be contracted and shipped in the first half of March, and that it will arrive at the main port of China for delivery and customs clearance before April 12.

Professionals believe that the shipping time from the United States to China is about 35-50 days (it takes about 4-6 weeks for the ports on the west coast of the United States to ship goods to China). In terms of time, it is difficult to achieve "customs clearance". Moreover, after the United States imposed additional tariffs on China for the second time, China's cotton textile and clothing enterprises have a greater pressure to meet the export traceability orders of the United States and fulfill the pre contract, so the consumption demand of textile enterprises for American cotton and cotton from other origins will inevitably decline.