China's textile industry is navigating a complex web of external policies and geopolitical tensions. Trump's scheduled visit from May 13 to 15, 2026, comes at a critical juncture when the sector faces high costs and stagnant export markets.
Cost Squeeze: Energy and Sanctions
In early 2026, raw material costs surged due to two factors. The U.S. military action in Venezuela sparked energy market panic, followed by joint U.S.-Israel strikes on Iran, which led to the closure of the Strait of Hormuz. International oil prices spiked and remained elevated. Polyester filament yarn and chemical fibers, derived from petroleum, saw sharp cost increases, squeezing corporate profits. Industry operating rates stayed low, trapping the market between "rising prices with no orders" and "falling prices with losses."
On May 2, the U.S. sanctioned five Chinese petrochemical companies for alleged Iranian oil transactions, disrupting domestic chemical fiber supply stability. Although a U.S. court ruled the 10% global tariff policy illegal on May 7, the Section 301 tariffs on Chinese textiles remain in effect, keeping overall export costs high.
Policy Gambit: Tariff Relief and Market Shifts
Trump's visit coincides with high U.S. inflation and Middle East tensions. Public data shows 66% of Americans oppose military action in Iran, making oil prices a key constraint for the administration. China, as a rare mediator, hosted Iran's foreign minister on May 6, and the two sides may reach consensus on de-escalation. If tensions ease, oil prices will fall, lowering costs for polyester and chemical fibers.
Tariffs remain central to U.S.-China trade talks. With U.S. tariff policies facing repeated legal setbacks and growing domestic opposition, industry insiders expect the visit could yield tariff reductions or exemptions for Chinese textiles. This would lower export costs, revive orders for apparel and home textiles, and ease the current demand slump.
Industry Resilience: Waning Impact and Self-Reliance
Notably, as China's textile chain becomes more self-reliant, the marginal impact of U.S. policies is diminishing. The sector has diversified from capacity relocation to technology upgrades and market expansion. Companies now operate a dual-circulation model, balancing domestic and international markets.
A positive signal from Trump's visit could restore market confidence. Firms may normalize operations and boost capacity utilization, while capital markets might increase attention on textile stocks, aiding financing and transformation.