US cotton sector in crisis due to falling demand, mill closures.

Recent reports indicate a significant decline in demand for US cotton, leading to the closure of numerous mills across the country. Factors leading up to this downturn include changing trade deals, particularly NAFTA, which have disrupted the industry. The loophole of de minimize trade policy, exempting imports under $800 from taxes, has facilitated the influx of duty-free products, further undermining domestic production. This loophole has been cited as the cause of the recent closure of eight mills, including prominent ones like 1888 Mills and Gildan yarn plant.

Unlike other sectors experiencing resurgence in domestic manufacturing, such as semiconductors or industrial metals, textiles lack the same urgency. Despite the pandemic highlighting the importance of a robust domestic industry, textiles are not deemed as critical. Consequently, the push for re-shoring manufacturing hasn't extended to textiles, leaving the sector vulnerable.

The United States Department of Agriculture Economic Research Service reports that cotton mill use is at its lowest since the 1880s, with only 1.9 million bales processed in the 2023-24 marketing year. This decline can be traced back to the WTO Agreement on Textiles and Clothing, which phased out quotas on textile imports, leading to increased competition from countries like China and a subsequent weakening of domestic cotton mill use.

Moreover, over three-fourths of US cotton supply is now exported, leaving farmers heavily reliant on foreign markets and vulnerable to geopolitical disruptions. Gary Adams, CEO of the National Cotton Council, warns that this overreliance on exports exposes farmers to significant risks.

In summary, the US cotton industry is facing a severe downturn, with declining demand from domestic manufacturers, mill closures, and a heavy reliance on export markets. These challenges underscore the need for strategic measures to revitalize the domestic textile industry and reduce dependence on foreign markets.