U.S. President Trump's planned visit to China from May 13-15 comes at a time when the Chinese textile industry is caught in a dual trap of high raw material costs and stagnant export markets. Industry data shows that since the start of the year, geopolitical tensions in the Middle East have driven international oil prices higher, directly inflating the costs of petroleum-based core raw materials like polyester filament and chemical fibers. Meanwhile, the U.S. Section 301 tariffs and additional temporary tariffs remain in effect, keeping the combined tariff rate on Chinese textile exports to the U.S. at historically high levels, severely compressing corporate profit margins and keeping industry operating rates low.
Can this high-level meeting be the key to breaking the deadlock? Historically, every major shift in U.S.-China economic relations has profoundly reshaped the global textile supply chain. After WWII, U.S. industrial upgrading pushed capacity to Japan, then to the Asian Tigers, until China became the global manufacturing hub with its complete supply chain and demographic dividend. In recent years, the U.S. policy shift, including the Section 301 investigation and tariff hikes, has directly driven Chinese production capacity to Southeast Asia and spawned new business models like cross-border e-commerce. While the Chinese textile industry has diversified from reliance on the U.S. market to include the EU, Middle East, and Latin America, U.S. policy remains a key variable for short-term industry fluctuations.
Raw Material Costs: The Middle East as the Industry's 'Barometer'
The most immediate pain point is raw material costs. The U.S. strike on Venezuela in early 2024, followed by the joint U.S.-Israel attack on Iran after the Spring Festival, and Iran's blockade of the Strait of Hormuz, have kept international oil prices elevated. Prices of polyester filament and chemical fibers have risen accordingly, but downstream orders remain weak, leaving companies in a dilemma: raising prices loses orders, while lowering prices erodes margins.
China, as one of the few countries capable of mediating in the Middle East, hosted Iran's Foreign Minister on May 6, just before Trump's visit. There is potential for a consensus on managing the Middle East situation. If tensions ease, oil prices could return to a reasonable range, directly lowering chemical fiber raw material costs—an immediate boon for textile companies. However, caution is warranted: 66% of Americans oppose military action in Iran, and high oil prices are a domestic political pressure for the Trump administration, making conflict management a priority. Yet the complexity of the Middle East means the easing process could be volatile.
Tariff Dynamics: Diminishing Marginal Impact but Important Expectations
Tariffs remain another key bottleneck for Chinese textile exports to the U.S. On May 7, the U.S. Court of International Trade ruled the Trump administration's 10% global import tariff illegal, marking another judicial setback after the Supreme Court's rejection in February. Despite these legal losses, the Section 301 tariffs on Chinese textiles continue, and combined with temporary tariffs, the overall rate remains high.
Industry expectations suggest that if the visit leads to a U.S.-China trade consensus, it will likely involve tariff reductions or exemptions for certain categories. If realized, this would directly lower export costs and revive U.S.-bound orders, especially benefiting apparel and home textiles. However, the marginal impact of U.S. tariff policy is diminishing as China's textile supply chain becomes more self-reliant. Many companies have already diversified risk through overseas factories and market diversification, so tariff reductions today would have less impact than five years ago.
Industry Confidence: A Catalyst from Stagnation to Recovery
Prolonged tariff barriers, high costs, and weak demand have eroded industry confidence, with companies hesitant to invest or expand. A positive signal of U.S.-China rapprochement from this meeting could significantly boost confidence. Companies may gradually resume normal operations, raising industry operating rates. Capital market attention on the textile sector could also rebound, aiding financing and transformation.
But the industry must be realistic: China's textile sector has formed a 'dual circulation' pattern balancing domestic and international markets, and is less dependent on any single event. True growth drivers are technological innovation, brand building, and supply chain efficiency, not short-term policy dividends.