Seshadri Ramkumar, Texas Tech University, USA
“Back and forth on tariff discussions is problematic and it results in the slowdown of global cotton demand,” stated Dr. Gary Adams, President and CEO of Memphis-based National Cotton Council, USA. On January 16th, Adams spoke at the Lubbock-based Plains Cotton Growers’ meeting highlighting the impact of trade tensions between the world’s largest cotton user, China and the largest cotton exporter, the United States of America.
China’s 25% tariff on U.S. cotton affects the whole supply chain. China was expected to import about 3 million bales this marketing season, from the United States. The continued trade tensions have affected the cotton trade. Because of this situation, China may import less than one million bales from the United States, stated Adams.
Tariffs affect the general economy and it certainly impacts cotton and textile consumption stated Professor John Robinson, Cotton Economist at Texas A & M University. Cotton’s demand slows down during recessions and in uncertain trade scenarios, unlike food grains, added Robinson.
In the light of the current trade tensions between China and the United States, to a query from this scribe on the 2019 cotton season, Steve Verett, Executive Vice President of Plains Cotton Growers, Inc., stated, “Trade tensions certainly are casting some uncertainty as to the exact planting mix for farmers on the High Plains of Texas. There continues to be great interest in cotton production and some increase of plantings in our northern panhandle area, especially given the very successful growing season of 2018. Currently we expect some increase in cotton plantings for 2019, but relative prices for crops at planting time will ultimately dictate how much that increase might be.”
Certainly, cotton growers are hoping that a forthcoming visit by the Chinese delegation to the United States may find a favorable solution to the ongoing trade tensions between the two countries. There are no winners with retaliatory tariffs as they affect consumers’ interest in textile goods.