Recently, the U.S. Trade Representative proposed to impose an additional 25% tariff on Chinese products on the list. However, the list launched by the United State does not cover textile & clothing industry, which has limited impact on the export of this industry. The next day, China launched a counterattack to raise the tariff of US cotton, which was only 1% to 26% now. This counterattack will certainly detrimental to US cotton prices and make it nonprofit. On the contrary, China’s cotton export will be encouraged contribute to the price spread between China and the U.S.. Although China is the second largest cotton exporter of the United State, trade war still can’t cause a huge impact on its cotton price. The reasons are as below:
Firstly, the supply of cotton in China is sufficient.
Secondly, the raw materials of textile & clothing industry in China are mainly cotton, which means cotton is in great demand.
In April 5th, the U.S. announced that it would consider to add tariffs to China’s export commodities which worth 100 billion. On the evening of April 6th, China's Ministry of Commerce countered again with a tough attitude. We can continue to pay attention to this trade war.