Textiles and tariff tantrum
India’s export opportunities in textiles and apparels will significantly increase not only due to the space vacated in the United States by China, but also due to zero tariff regime for textile exports to the United Kingdom, informs Seshadri Ramkumar.
United States-China deal has led to positive reactions by global financial markets, but uncertainty persists. Uncertainty is not good for business in terms of expansion and investments.
Given the current scenario, China comes out to be a loser in the emerging textiles trade landscape, while providing opportunities for other textile manufacturing powerhouses like India.
US cotton market must look for new markets and new products. Chinese textile and apparel products coming into the United States will be more expensive than its competitors like India, Bangladesh, and Vietnam. Given the less competitive nature of Chinese products, it may not be importing cotton from the United States like it did before.
Keith Lucas, Vice President for Marketing at Lubbock-based Plains Cotton Cooperative Association stated, “US cotton industry must look for other markets. India might offer new opportunities.” India expects to double its textiles and apparels export from $44 billion to $100 billion by 2030. Its strength is in cotton apparels and home textiles. India must enlarge its fibre base and United States has opportunity to engage with the Indian textiles sector. Indian spinning sector is lobbying with the government to remove the 11 per cent import duty on cotton imports. While total removal may not be possible, any reduction in the import duties will be beneficial for cotton exporting countries.
The proposed trade deal between the United States and India will open-up doors as the US government is keen to capture Indian market for its agricultural products.
I had an opportunity to present an invited talk on “Trade in the New Global Era,” for the North India Section of The Textile Institute [NISTI-REGD], on the same day when the United States and Chinese high-level delegation was meeting in Geneva. I opined in my talk that zero tariff is impossible with China and the tariff may come down to 30-60 per cent range. Per the current agreement, United States will be imposing 30 per cent tariff on imported goods from China in addition to maintaining existing tariffs before April 2, 2025, including Sections 301 and 232 tariffs. The effective import duties for Chinese products will be more than 50 per cent, which will make them uncompetitive against textile and footwear products from India and other major exporters of these products.
China has agreed to impose 10 per cent tariff on imports from the United States while still retaining the 15 per cent tariff it imposed prior to April 2, 2025. If China will retain its existing base tariff on cotton from the United States, the import duties for US cotton will be higher depending on the base rate.
“Chinese import duties on cotton are complex and complicated,” stated a US-based cotton economist. The base rate can vary between 0 and 40 per cent depending on licenses, nature of manufacturing units, etc. China’s input costs will rise, which will make its textile exports uncompetitive opening doors for other textile exporting countries.
India’s export opportunities in textiles and apparels will significantly increase not only due to the space vacated in the United States by China, but also due to zero tariff regime for textile exports to the United Kingdom.
United States cotton sector with its emphasis on quality, timely delivery, effective outreach and engagement with India and other markets, it can be optimistic for the emergence of a new market landscape and value-added sustainable products.
The lecture on “Trade in the New Global Era,” is available at:
About the author:
About the author:
Dr Seshadri Ramkumar is a Professor, Nonwovens & Advanced Materials Laboratory in Texas Tech University, Lubbock, TX, USA.
