China Cotton and Products Update | USDA GAIN
The latest USDA GAIN report highlights continued structural change in China’s cotton sector. Production is expanding in Xinjiang under subsidy support, while consumption growth remains muted amid substitution toward synthetic fibers. Imports have fallen sharply as domestic output and state reserves keep supplies ample. Meanwhile, trade frictions and tariffs continue to reshape global flows between China and the United States.
Production and Area
Cotton production in Marketing Year (MY) 2025/26 is forecast at 6.91 million metric tons (MMT), up 8 percent from the previous year and slightly above USDA’s official projection. Xinjiang dominates output, accounting for more than 92 percent of national production. Planted area is forecast at 7.31 million acres, while yields are expected to rise to 0.93 MT/acre. Outside Xinjiang, acreage continues to decline due to lower profitability relative to other crops.
| Marketing Year | Area (Million Acres) | Yield (MT/Acre) | Production (MMT) |
|---|---|---|---|
| 2024/25 | 7.26 | 0.90 | 6.50 |
| 2025/26 (Forecast) | 7.31 | 0.93 | 6.91 |
Consumption and Demand
Cotton consumption remains flat, forecast at 8.05 MMT in 2024/25 and 8.15 MMT in 2025/26. The continued rise of polyester and viscose reduces cotton’s share of fiber usage, which has declined to 16.7 percent. Domestic apparel sales rose modestly in the first half of 2025, while yarn exports offered some support to spinners.
Trade and Tariffs
Cotton imports are sharply lower. MY 2024/25 imports are estimated at 1.1 MMT, down 65 percent year-on-year, with Brazil and Australia gaining market share as U.S. shipments fell to just 18 percent of the total. For MY 2025/26, imports are forecast at 1.25 MMT. High domestic stocks and competitive Xinjiang supply continue to suppress foreign demand.
Source: USDA GAIN | Chart: Paradigm Futures
U.S. Tariffs on Chinese Textiles & Apparel
U.S. tariffs remain a significant headwind for Chinese textile exports. Multiple layers of duties are in effect, with Section 301 tariffs extended through the end of 2025.
| Tariff Category | Rate | Remarks |
|---|---|---|
| MFN | 9% – 32% | Varies by HS code |
| Reciprocal Tariffs | 10% | Applies to all commodities |
| Fentanyl Tariffs | 20% | Applies to all commodities |
| Section 301 | 7.5% – 25% | Extended until Dec. 31, 2025 |
China’s Tariffs on U.S. Cotton
In response, China maintains elevated tariffs on U.S. cotton imports. While the WTO-mandated tariff-rate quota (TRQ) remains unchanged at 894,000 MT at 1 percent duty, cotton outside this quota faces significantly higher tariffs.
| Tariff Category | Rate | Notes |
|---|---|---|
| Within WTO TRQ | 1% | 894,000 MT annual quota |
| Outside TRQ | 40% | Sliding scale allocation limited in 2025 |
| Retaliatory Tariffs | Up to 25% | Applied on top of base duties |
Strategic Outlook
The report underscores Beijing’s strategy to increase self-sufficiency by transferring textile and apparel capacity to Xinjiang. Local processing rates are expected to climb from 42 percent in 2024 to 60 percent by 2027, with more than 45 million spindles in place. Improved logistics, subsidies, and lower energy costs strengthen Xinjiang’s competitiveness, further reducing import demand.
Overall, China’s cotton sector enters MY 2025/26 with higher output, stagnant consumption, and weaker imports. These dynamics, combined with the ongoing tariff environment, reinforce China’s role as a self-sufficient cotton producer while reshaping U.S. export opportunities in the global market.
