Beijing’s retaliatory tariffs on US cotton will accelerate offshoring of cotton spinning and lower-end textile and apparel manufacturing to South and Southeast Asia as Chinese businesses are bracing up for possible US tariffs on their finished goods.

The Trump administration’s tentative 10 per cent tariff on $200 billion Chinese merchandise has so far not touched the vast majority of China-made textiles and garments, except for fur and leather apparel and accessories like hats, gloves and handbags. Before the recently added 25 per cent duty, most US cotton sent to China was exempt from import tariffs, which range from 1 to 40 per cent, depending on volume and prices.

Ad per China Cotton Association, normal imports that did not fall under the processing trade, bonded supervision areas and other special customs categories – which are tariff-exempt provided no imported cotton is consumed in China – accounted for only 21 per cent of total imports last year.