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Cotton Council Says China Tariffs Will “Significantly” Harm US Cotton Sector

As part of its second slap back on tariffs, China announced Wednesday that it would target 106 U.S. products with 25 percent tariffs, and American cotton was one among them.

Specifically, China said uncombed cotton and cotton linters coming from the U.S. would face the new tariffs, and the National Cotton Council of America has said the proposed higher tariffs on raw cotton could undermine U.S. cotton trade with the country and “significantly” harm the health of the domestic sector.

“I cannot overstate the importance of China’s market to U.S. cotton farmers and the importance of U.S. cotton in meeting the needs of China’s textile industry,” NCC chairman Ron Craft said in a statement Wednesday.

According to a U.S. Department of Agriculture (USDA) GAIN report released Wednesday, the proposed tariffs would carry the current tariffs on U.S. raw cotton from 1 percent to 26 percent.

News of the tariffs has sent cotton prices skyrocketing from 79.61 cents at 9 p.m. Wednesday to as much as 82.64 cents Thursday—a more than 3 cent jump within a day, or a 3.77% increase. The International Cotton Advisory Committee said Tuesday, ahead of the cotton tariff news, that cotton prices will likely inch up to a five-year high of 84 cents per pound for next season, but it’s unclear how this newly introduced volatility could impact that forecast.

Craft said NCC is urging the U.S. and China to come back to the table quickly to resolve the current trade tensions and preserve what’s been a long-term and mutually beneficial trade relationship.

“The U.S. cotton industry stands ready to assist the U.S. government and our trading partners in China to find a resolution to this damaging trade dispute,” Craft said.

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China’s latest tariffs on 106 U.S. goods including cotton, came in response to the list of 1,300 products from China the U.S. said will face tariffs as a result of its Section 301 investigation into China’s forced transfer of U.S. technology and intellectual property. Before that—and in response to the U.S. tariffs on steel and aluminum instituted under Section 232 on grounds that the imports threatened U.S. national security—China said it would add tariffs to 128 U.S. products.

In an interview on ABC News Arizona, Arizona cotton farmer Kevin Rogers said he is nervous about the tariff threats.

“Agriculture tends to be one of the first groups that gets put on the table as a pawn so to speak,” Rogers told the news channel. “It can have devastating effects on the market if there’s tariffs that come up, then those countries probably would think twice before they buy our product.”