30. January 2019 / Trade conflict between the US and China: Implications for the cotton industry

How does the trade conflict between the US and China affect the cotton industry? Which developments and shifts in trade relations are conceivable in the future?

Henning Hammer, Executive Director Otto Stadtlander GmbH, and Vice President Bremen Cotton Exchange, Bremen

“Unhindered trade and goods traffic are essential for our industry. Therefore, I view the trade dispute with concern. A major problem arising from it is uncertainty. Uncertainty is poisonous for the business, especially as it has an impact on downstream stages, in our case such as the textile and clothing trade, because of higher tariffs and counter tariffs. This must ultimately lead to shifts in the cotton trade and significantly alter trade flows to China in favour of cotton from India, Brazil and possibly also West African origins. In contrast, cotton from the USA must be increasingly exported to other destination countries.

Although one might think that Asian countries such as Bangladesh, India, Pakistan and Vietnam can benefit from the current situation, we must not forget that a large part of these countries’ yarn production is exported to China. A paralysis of the textile trade as a result of the current trade conflict thus automatically has a negative impact on many other countries which are involved with China within the textile value chain.

The further development depends on the decisions of the nations concerned. The bilateral talks between the US and Chinese Presidents during the G20 summit in Argentina, which should subsequently deliver results, will hopefully ease the situation and restore calm and, above all, confidence to the business.”

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