US cotton supply affected due to changing trade policies

The US cotton market faces uncertainty as shifting trade policies disrupt global sourcing. Tariff hikes on China, Mexico, and Canada are reshaping supply chains. A 10 per cent tariff increase on Chinese cotton-related imports took effect in February, followed by another 10 per cent in March, bringing the total increase for 2025 to 20 per cent. Meanwhile, 25 per cent tariff hikes for Mexico and Canada were implemented in March, though some products were later exempted. China and Canada retaliated, while Mexico has yet to respond.

The Federal Reserve remains cautious amid economic fluctuations. The US added 151,000 jobs in February, while unemployment edged up to 4.1 per cent. Wage growth of 4.1 per cent year-over-year continues to outpace inflation, which stood at 3.0 per cent in January.

Consumer sentiment weakened, with the Conference Board’s Consumer Confidence Index dropping 7 points to 98.3, its third straight decline. Consumer spending fell 0.5 per cent in January, though apparel sales edged up 1.1 per cent month-over-month.

Despite these economic headwinds, cotton imports have grown. US cotton-related shipments rose 26 per cent year-over-year in January, driven by inventory restocking and tariff-driven adjustments. With ongoing trade uncertainty, the US cotton market faces a challenging outlook.