In mid-May 2026, Donald Trump visits China for the first time in nine years, arriving at a moment when the Chinese textile industry is trapped between soaring costs and tepid demand. International oil prices remain elevated due to Middle East tensions, pushing up costs for polyester filament and chemical fibers. Many small and medium-sized weaving mills are caught in a dilemma: accepting orders means losses, while rejecting them means idle capacity. Meanwhile, despite judicial setbacks to U.S. tariff policies, the combined tariff rate on Chinese textile exports to the U.S. stays high, squeezing exporters' margins further.
Cost Side: Oil Price Transmission and Geopolitical Games
Oil is the starting point of the chemical fiber chain. After the U.S. strike on Venezuela at the start of the year, market anxiety over energy supply began to push up raw material costs. The subsequent joint U.S.-Israeli airstrike on Iran and the brief closure of the Strait of Hormuz kept Brent crude at elevated levels for months. This volatility directly impacted polyester filament and chemical fiber prices: upstream costs rose, but downstream apparel brands and buyers resisted price increases, forcing weaving mills to keep utilization rates low.
China, as the world's largest chemical fiber producer, still relies heavily on oil imports. Although domestic petrochemical firms have diversified sourcing—increasing imports from Russia and non-Gulf Middle East suppliers—short-term price shocks remain hard to fully hedge. The diplomatic choreography—Iran's foreign minister visited China on May 6, followed by Trump's arrival—suggests a possible U.S.-China understanding on containing the Middle East conflict. If tensions ease, a drop in oil prices would directly lower the cost of polyester chips and staple fibers, giving textile mills much-needed breathing room.
Tariff Side: Judicial Reversals and Export Expectations
The U.S. tariff policy on Chinese textiles in 2026 presents a complex picture of judicial defeats and administrative delays. On May 7, the U.S. Court of International Trade ruled that the 10% global import tariff was illegal—the second such setback after the Supreme Court's rejection in February. However, Section 301 tariffs on Chinese textiles remain in effect, and combined with previously imposed temporary duties, the total tariff burden on Chinese textile exports to the U.S. stays high.
Customs data shows that in Q1 2026, China's textile and apparel exports to the U.S. fell by about 8% year-on-year, with home textiles and woven garments suffering the largest declines. Some exporters have pivoted to the EU, Middle East, and Latin America, but channel switching takes time, and price competition in new markets is fierce. Industry insiders expect that if this high-level meeting leads to tariff reductions or exemptions for certain categories, pent-up demand for U.S. orders would be released, particularly benefiting clusters like Nantong home textiles and Shaoxing fabrics.
Industry Resilience: From Passive Pressure to Active Adjustment
After years of market turbulence, China's textile sector has built a dual-circulation model—balancing domestic and foreign markets and diversifying across traditional and emerging destinations. Data from Shengze and Keqiao show that the domestic share of chemical fiber fabrics rose from 55% in 2020 to 68% in 2025, significantly reducing reliance on U.S. exports. Meanwhile, capacity expansion in Southeast Asia and South Asia has accelerated, with some orders completed through overseas factories to bypass tariffs.
But this adjustment comes with costs. Overseas plants incur higher management and logistics expenses, and local supply chains are less complete, reducing efficiency. If Trump's visit signals a détente in U.S.-China economic relations, it could boost industry confidence—companies might reconsider domestic capacity expansion rather than relocating abroad. Capital market interest in the textile sector could also revive, supporting investments in green dyeing and smart weaving technologies.