Category: Trade

U.S. cotton is among the most export‑dependent agricultural commodities, with more than 80% of annual production moving into global markets rather than being used domestically (U.S. Department of Agriculture, 2026a). Although China has not always been a consistent buyer, importing less than 15% of U.S. cotton exports in some years and more than 30% in other years, it has nevertheless remained a somewhat reliable partner, accounting for nearly 30% of U.S. cotton exports in more recent years (2020–2024) (U.S. Department of Agriculture, 2026b). 

Once the most important market for U.S. cotton, China has become a far less reliable partner in 2025, as recent import patterns show greater volatility and reduced engagement with the U.S. agricultural sector. In 2025, China’s purchases of U.S. cotton fell from $1.5 billion to just $0.2 billion, an 85% decline, while its import volume dropped at nearly the same rate, from 0.8 million metric tons (MMT) to 0.1 MMT. In contrast, exports to markets outside China expanded substantially over the same period. The value of U.S. cotton exports to non‑China destinations rose from $3.5 billion to $4.6 billion, a 32% increase, while quantities surged 51%, from 1.7 MMT to 2.6 MMT (Table 1) (U.S. Department of Agriculture, 2026b). 

Why did China sharply reduce its imports of U.S. cotton? While the trade war and subsequent political tensions certainly accelerated the decline, the underlying shift runs deeper than tariffs. China’s overall import strategy has fundamentally changed as its domestic cotton sector has undergone major structural adjustments since 2010. Over the past decade, China has increased production, drawn down its massive state-held stockpiles, and reduced its dependence on foreign fiber. Since 2021 alone, domestic output has risen by more than 30% (U.S. Department of Agriculture, 2025a). As a result, China is increasingly able to meet the needs of its textile and apparel industry with domestic cotton rather than imports. Taken together, these developments suggest that China’s reduced reliance on U.S. cotton is not simply a temporary response to trade tensions but part of a longer-term realignment. 

Table 2 makes clear that the steep decline in U.S. cotton exports to China was not simply the result of tariffs or bilateral tensions, but part of a much broader contraction in China’s overall import demand. China’s total cotton import value fell from $5.3 billion in 2024 to $1.9 billion in 2025, while import volumes dropped from 2.6 million to 1.1 million metric tons. Every major supplier experienced significant losses: Brazil’s shipments fell by more than 50%, India’s collapsed by over 90%, and Australia also recorded substantial reductions.

The across‑the‑board declines underscore a structural shift in China’s sourcing strategy rather than a U.S.-specific outcome.

Table 1. U.S. Cotton Exports: 2024 and 2025

	2024	2025	Change	% Change
	Value ($ billion)
China	$1.5	$0.2	-$1.3	-85.1%
Total (w/o China)	3.5	4.6	1.1	32.0%
Total (w/ China)	5.0	4.8	-0.1	-2.8%
	Quantity (million metric tons)
China	0.8	0.1	-0.6	-84.6%
Total (w/o China)	1.7	2.6	0.9	51.0%
Total (w/ China)	2.5	2.7	0.2	9.6%
Source: U.S. Department of Agriculture (2026b)

Table 2. China’s Cotton Imports (Major Exporting Countries): 2024 and 2025

	2024	2025	Change	% Change
	Value ($ billion)
Total	$5.3	$1.9	-$3.4	-63.6%
Brazil	2.2	0.8	-1.4	-63.4%
U.S.	1.9	0.2	-1.6	-87.8%
Australia	0.7	0.6	-0.1	-13.8%
India	0.1	0.0	-0.1	-91.1%
Turkey	0.1	0.1	0.0	3.7%
	Quantity (million metric tons)
Total	2.6	1.1	-1.5	-59.2%
Brazil	1.1	0.5	-0.6	-57.8%
U.S.	0.9	0.1	-0.8	-86.8%
Australia	0.3	0.3	0.0	0.2%
India	0.1	0.0	-0.1	-90.9%
Turkey	0.1	0.1	0.0	-4.1%
Source: Trade Date Monitor®(2026)

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References

Trade Data Monitor®. (2026). https://tradedatamonitor.com/

U.S. Department of Agriculture (USDA) (2026a). PSD Online. Foreign Agricultural Service. https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery

U.S. Department of Agriculture (USDA) (2026b). Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

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Muhammad, Andrew. “When China Stops Buying: Is this the New Reality for U.S. Cotton?” Southern Ag Today 6(9.4). February 26, 2026. Permalink

Authors : Jiyeon Kim, Junior Research Economist- Agricultural Risk Policy Center, North Dakota State University

Andrew Muhammad, Ph.D. Professor and Blasingame Chair of Excellence, University of Tennessee Institute of Agriculture- Department of Agricultural and Resource Economics

In 2025, the President imposed a series of tariffs under the International Emergency Economic Powers Act (IEEPA), reshaping U.S. trade policy. These measures, ranging from fentanyl‑related tariffs in February to broad reciprocal tariffs implemented in April, generated an estimated $130 billion in revenue by early December with implications for multiple sectors, including agriculture. Agricultural inputs such as fertilizer, pesticides, seeds, and farm machinery were subject to these duties, resulting in roughly $1.1 billion in tariff collections between February and November. Although representing small shares of total farm input spending, these tariffs contribute to rising production costs throughout the supply chain (Arita et al., 2026). We provide a brief discussion of these tariffs in this article; a more detailed analysis is presented in IEEPA Fertilizer Tariffs: Revenue, Relief, and Pass‐Through at the following link: https://ageconsearch.umn.edu/record/387621?v=pdf.

IEEPA tariffs have been imposed on several agricultural inputs including fertilizer, pesticides, seeds, and farm machinery, against a backdrop of already volatile input prices and low commodity prices. Based on import data from the U.S. International Trade Commission and tariff rates specified in executive orders, IEEPA tariff revenue collected on agricultural input imports is estimated at roughly $1.1 billion between February and November 2025 (see Figure 1). To provide some context, USDA projects that U.S. farmers will spend about $27.2 billion on seed, $20.6 billion on pesticides, and $33.5 billion on fertilizers in 2025 (Arita et al., 2026). The tariff revenue collected on these products accounts for approximately 0.2% of seed spending, 1.5% of pesticide costs, and 0.4% of fertilizer costs. Although these shares appear relatively small, they do not fully capture the broader cost pressures facing producers. The tariffs on materials such as steel, aluminum, and machinery components may raise additional costs for U.S producers across the supply chain. 

Figure 2 shows the estimated monthly IEEPA tariff revenue by agricultural input category from January through November 2025. While tariff revenue for most agricultural inputs changed modestly, revenue from imported farm machinery rose sharply following the implementation of the 10% baseline tariff in April. This increase was driven primarily by imports from China and India.

Although tariff revenues on key inputs represent a relatively small share of farm expenditures, they contribute to a broader rise in production costs, particularly when combined with duties on steel, aluminum, and machinery components. Continued monitoring is essential as these policies evolve and their cumulative impacts unfold.

Figure 1. Estimated Total IEEPA Tariff Revenue (February-November, 2025)

Figure 2. Estimated Monthly IEEPA Tariff Revenues for Agricultural Inputs in 2025

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References

Arita, S., Chakravorty, R., Kim, J., Lwin, W., Steinbach, S., Wang, M., and Zhuang, X. (2026). IEEPA Fertilizer Tariffs: Revenue, Relief, and Pass‐Through. NDSU Agricultural Trade Monitor 2026‐01. Center for Agricultural Policy and Trade Studies, North Dakota State University. January 19, 2026. https://doi.org/10.22004/ag.econ.387621

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Kim, Jiyeon, and Andrew Muhammad. “How 2025 IEEPA Tariffs Affected Agricultural Inputs and Production Costs.” Southern Ag Today 6(7.4). February 12, 2026. Permalink http

A substantial share of U.S. agricultural production is sold overseas (Figure 1). Exchange rates, therefore, play a central role in export competitiveness and, indirectly, in domestic price prospects. For crops with heavy export exposure, the value of the dollar is not just a macroeconomic headline; it is part of the demand curve faced by Southern producers.

The economic intuition is straightforward. Most globally traded agricultural commodities are priced in U.S. dollars. When the dollar strengthens, foreign buyers must use more local currency to purchase the same dollar-priced commodity, which tends to soften demand at the margin and place downward pressure on prices. When the dollar weakens, U.S. supplies become cheaper in foreign-currency terms, export bids often improve, and U.S. crops become easier to place in global markets. This helps explain why the dollar and broad commodity prices frequently move in opposite directions, even though exchange-rate effects can be offset by other market forces.

In 2025, the exchange-rate environment turned more supportive for U.S. agriculture. After rising 7.1 percent in 2024, the nominal broad dollar index declined 7.2 percent over 2025 (Figure 2). Over the same period, major U.S. agricultural customers experienced notable currency appreciation against the dollar: the euro strengthened 12.6 percent, and the Mexican peso appreciated 12.7 percent (Figure 3). These movements improved foreign purchasing power for U.S. shipments and helped support U.S. crop exports. At the same time, Brazil’s real appreciated by roughly 11 percent, which can tighten Brazilian exporters’ local-currency margins and reduce their ability to price aggressively, all else equal.

Empirical research supports this channel. Shane et al. (2008) find that a 1 percent decline in the trade-weighted dollar is associated with roughly a 0.5 percent increase in the value of U.S. agricultural exports. Exchange rates, however, rarely operate in isolation. Weather outcomes, yields, freight costs, geopolitics, and policy shocks can dominate price formation in the short run (an important lesson from the post-2022 period).

For Southern producers, the dollar’s decline in 2025 is a constructive signal for export-oriented crops because it supports international competitiveness without requiring lower farm-gate prices. The main limitation is timing: exchange-rate effects pass through bids, basis, and contracting practices unevenly, so benefits can vary across regions and marketing windows. Even so, the directional effect is favorable. 

If global conditions remain orderly and U.S. interest rates drift lower, the dollar may stay softer and continue to support the export channel; renewed risk aversion, however, could reverse this trend and reintroduce headwinds. For export-dependent Southern crops, monitoring exchange-rate conditions alongside basis and contract timing remains an essential part of marketing discipline.

Figure 1 – Exports account for a large share of output in several U.S. crops

Figure 2 – The U.S. dollar declined in 2025

Figure 3 – U.S. dollar weakened against key agricultural trading partners in 2025

References

Federal Reserve Bank of St. Louis. (2026). Federal Reserve Economic Data. FRED. https://fred.stlouisfed.org/. Accessed January 23, 2026

Shane, M., Roe, T. L., & Somwaru, A. (2008). Exchange rates, foreign income, and U.S. agricultural exports. Agricultural and Resource Economics Review, 37(2). https://ageconsearch.umn.edu/record/45666/files/shane%20-%20current.pdf

U.S. Department of Agriculture, Office of the Chief Economist. (2025, January). World Agricultural Supply and Demand Estimates (WASDE). https://www.usda.gov/oce/commodity/wasde. Accessed January 23, 2026.

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Clemets Daglia Calil, Yuri. “A Weaker Dollar Can be Good News for U.S. Crop Exports.” Southern Ag Today 6(5.4). January 29, 2026. Permalink

Authors: ^[1]Luis Ribera, Texas A&M AgriLife Extension Service

Aleks Schaefer, Oklahoma State University

To say that it has been a very busy year for U.S. agricultural trade is an understatement. Since “Liberation Day” back on April 1, 2025, and even before that, trade has been a major news topic.  The current administration’s strategy of leveraging tariffs (combined with the sheer size of the U.S. market) to change trade relationships with the rest of the world has generated much uncertainty in nearly all markets.  Both agricultural and non-agricultural industries have reacted to the almost daily trade talk news.

U.S. agricultural exports wrapped up 2024 at $174.1 billion.  USDA Outlook for U.S. Agricultural Trade December 2025 report forecast that exports will close 2025 slightly higher than the previous year at $175.6 billion.  However, the forecast for 2026 exports is $173 billion, the lowest since 2021.  The reason for this slight decrease is both volume and value, as they are expected to decrease by 1.1% and 1.5%, respectively. A continuous decrease in soybean and sorghum exports to China are the main driver of the decrease in value of U.S. ag exports in 2025, as well as expectations for 2026.  China increased their imports of these two products from Brazil and Argentina due to the increased of U.S. tariffs on their exports.  There has been an increase in exports to other countries such as the EU, Mexico, Indonesia, and Vietnam, but not enough to offset the decrease in exports to China.

On the other hand, U.S. agricultural imports are expected to reach an all-time high in 2025 at $219.4 billion and are expected to decrease in 2026 to $210 billion.  The main reasons for this expected decrease are lower imports of horticultural products and vegetable oils.  Cocoa and products, as well as coffee and products, have increased the value of imports but reduced the volume, showing that prices of those products are expected to go up.  Hopefully, the recent announcement of tariff exceptions on some agricultural products, including beef, tea and coffee, fruit juice, cocoa, spices, bananas, oranges, tomatoes, and certain fertilizers, will help reduce their prices paid by U.S. consumers.

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^[1] Ribera is Professor, Department of Agricultural Economics, Texas A&M AgriLife Extension. Schaefer is Associate Professor, Department of Agricultural Economics, Oklahoma State University.

In 2025, U.S. spirit exports to Canada collapsed as a direct consequence of escalating trade tensions, marking one of the sharpest declines in cross-border alcohol trade in recent history. Prior to 2025, Canada accounted for about 11% of U.S. distilled spirit exports. Between 2022 and 2024, Canadian imports exceeded $250 million annually, making Canada the second-largest market for American whiskey, bourbon, rum, and other distilled spirits (USDA, 2025). In March 2025, Canada effectively halted imports and sales of U.S. wine and spirits in retaliation for tariffs imposed by President Trump on Canadian goods. Provincial liquor boards removed American products from shelves, triggering a dramatic plunge in U.S. spirit exports (DISCUS, 2025). Canada also imposed a 25% retaliatory tariff on U.S. distilled spirits and other products in March 2025, which was lifted in September (Government of Canada, 2025). However, the impact far exceeded what would be expected from a 25% tariff alone, underscoring the severity of the trade dispute.

Figure 1 shows monthly U.S. spirit exports to Canada (in million proof liters), comparing the 2022–2024 three-year average with 2025. The data show a sharp and sustained decline in 2025 relative to historical levels. From 2022 to 2024, monthly exports typically ranged between 1.2 and 2.3 million proof liters, peaking during summer months. In stark contrast, exports in 2025 fell dramatically after February, dropping from 1.4 million proof liters in February to just 0.2 million in April, and averaging less than 0.4 million proof liters per month for the remainder of the year. Overall, 2025 marks an unprecedented contraction in Canadian spirit imports from the United States. In terms of value, U.S. spirit exports to Canada averaged over $160 million between March and September in years prior. However, exports in 2025 during the same period were only $35 million (USDA, 2025). Comparing March through September, American distilled spirit sales to Canada were down approximately almost 80% compared to the prior three-year average, underscoring the severe impact of trade restrictions.

Such a steep decline signals fundamental shifts in cross-border alcohol trade that may not be reversed by tariff removal alone. The restrictions on U.S. spirits were not merely retaliatory; they appear to have stimulated domestic production and potentially redirected Canadian consumers toward local and alternative sources. The long-term effects remain uncertain. However, it is noteworthy that imports of oak casks and barrels—essential for aging spirits—rose by 6% during this period (USDA, 2025), suggesting increased investment in Canadian distilling capacity.

Figure 1. U.S. spirit exports to Canada: 2022-2024 and 2025

References

Distilled Spirits Council of the United States (DISCUS) (2025). Removal of U.S. Spirits from Canadian Stores in Retaliation to U.S. Trade Dispute Resulted in Sharp Sales Decline of U.S. Products, Canadian Products and Total Spirits Sales. https://distilledspirits.org/news/spirits-canada-analysis-removal-of-u-s-spirits-from-canadian-stores-in-retaliation-to-u-s-trade-dispute-resulted-in-sharp-sales-decline-of-u-s-products-and-total-spirits-sales/

Government of Canada (2025). https://www.canada.ca/en/department-finance/programs/international-trade-finance-policy/canadas-response-us-tariffs.html

U.S. Department of Agriculture (2025). Global Agricultural Trade System. https://apps.fas.usda.gov/gats/default.aspx

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Muhammad, Andrew. “Trade War Fallout: The Collapse of U.S. Spirit Exports to Canada in 2025.” Southern Ag Today 5(51.4). December 18, 2025. Permalink