Guest Commentary
Robert Antoshak
Managing Partner, Gherzi Americas
September 5, 2026
Washington’s offer reads simple enough on paper. Foreign factories that buy American cotton or American textile inputs get to ship a set volume of apparel into the United States without paying the new Section 301 tariff.
Four countries qualify: Bangladesh, Cambodia, Indonesia, Malaysia. Each gets a quota sized to what it buys from U.S. suppliers, running three years to start. Volumes and operating rules aren’t public yet. Goods entering under quota still owe the normal duty on the product, they’re just skipping the 301 add-on. USTR’s final notice sets the frame and leaves the rest to be worked out later.
Look at what sizes the quota. A shopping list. Origin rules have nothing to do with it and neither does fiber content, which puts the arrangement outside anything we’ve worked under since NAFTA. The industry has been arguing about it since the day it was announced. The administration’s policy establishes Tariff Rate Quotas, but it also has been a lightning rod for criticism and angst throughout the trade.
Cotton’s Gain
Cotton growers didn’t need anyone to explain what this does for them. The government’s trading access to the American consumer for demand for American fiber. If specifying U.S. cotton helps a factory outside Dhaka get its shirts in under a lower duty, that factory has a reason to specify U.S. cotton.
The timing’s part of the enthusiasm. Brazil has been taking export share for several seasons with cheaper logistics and a growing customer list across Asia. Growers here have watched prices sit in a range that barely clears the loan rate, with carryover heavy enough to kill any rally before it gets going. A policy that steers buyers toward American bales is worth something with prices sitting there.
The domestic mill base stopped being the main outlet a long time ago, and most of the crop leaves the country now. When your demand lives overseas, anything that makes overseas buyers prefer your fiber counts as a customer. Growers have been short of those.
Downstream, Nobody’s Cheering
Mills read the same page and see something else entirely.
NCTO has come out hard against putting raw cotton in the program. The worry’s that we’ll ship more bales overseas while spinning, knitting, weaving and cut-and-sew keep drifting further from here. We’d be exporting the fiber and importing the garment it became, then calling that a win for domestic manufacturing.
Try selling that to a yarn spinner in the Carolinas.
They argue the mechanism hands a small set of Asian suppliers an edge over both U.S. producers and the hemisphere. Roughly 70 percent of U.S. textile and apparel exports go to Western Hemisphere partners, and those regional chains buy American yarn and fabric, not just bales. NCTO also reports that Asia’s share of the U.S. import market climbed from 77 percent in 2019 to 79 percent while the hemisphere slid from 16 to 12.
A bale sold to Vietnam is one transaction. A pound of yarn sold to a knitter in Honduras carries the spinner, the power bill, the maintenance crew and the payroll behind all of it, and the fabric comes back through a port here inside a finished garment. The value stacks up in a way raw fiber never does.
Selling more cotton is fine. What bothers people is the rest of it, a structure that rewards a supply chain doing nearly all of its value-added work somewhere else.
Where the Forced Labor Case Falls Apart
Then there’s the awkward part. These 301 duties went on because the administration says the countries in question haven’t done enough about forced-labor goods. Buying a bale of American cotton tells you nothing about the rest of what’s moving through that factory.
Cotton happens to be the worst possible commodity for this kind of bookkeeping. Bales get blended at the opening line, and once fiber from four origins goes into the same lay-down, the yarn coming off the other end has no paper trail worth the name. That’s why UFLPA enforcement leaned on isotopic and DNA testing instead of invoices. An invoice proves somebody bought cotton. It says nothing about what ended up in the shirt.
Which means a mill can run U.S. fiber on one line, earn its credit, and keep sourcing other yarn and fabric through channels nobody can see into. Without tracing and enforcement behind it, the quota turns into a purchasing scheme wearing a human rights label.
The Proposal That Lost
Brands and retailers had their own reasons to fight another round of tariffs, mostly that the cost eventually lands on a price tag. Before the final action, AAFA, USFIA and the textile groups floated something else: let companies earn tariff credits by buying U.S. textiles and qualifying apparel from Western Hemisphere partners.
CAFTA-DR and USMCA already run on yarn-forward rules, so the regional benefit sits inside the origin test before anyone applies for anything. Credits earned against those rules would’ve reached spinners here and cutting rooms in San Pedro Sula at the same time, and customs already knows how to police them.
The administration went with country quotas for four Asian suppliers instead. Qualifying USMCA and CAFTA-DR goods did get carved out of the new duties. That carve-out’s real relief and nobody should wave it off. It also just sits there. An incentive pulls business toward those factories.
The industry ends up split. Growers pick up an export incentive. Some importers may see relief from the extra duty down the road. Spinners and weavers here could wind up competing against Asian garments built out of their own raw material, and factories in Mexico, Central America and the Caribbean get to compete with imports whose tariff break came from a procurement decision rather than from making anything nearby.
Details Nobody Has Seen
Everything depends on rules nobody’s written yet. How does a quota get calculated? Does buying yarn or fabric earn more access than buying bales? Who holds the rights, the foreign government, the manufacturer, the exporter, the U.S. importer and can those rights be traded or transferred? And what stops transshipment, or the quiet mixing of inputs nobody verified?
Anyone who worked through the Multifiber Arrangement knows where that last set of questions leads. Quota was an asset. It’d get allocated, brokered, hoarded and priced, and in Hong Kong the quota cost more than the labor going into the garment. Whoever holds these rights collects the spread between the 301 rate and zero, and that spread’s worth serious money on volume. Design the allocation badly and you’ve handed somebody a windfall for holding paper.
Paperwork questions, every one of them. They also decide whether this supports the whole chain or just moves cotton one direction and garments the other.
So What’s It For?
If the point’s backing American industry, the incentive ought to follow American work. Cotton deserves support. So do the mills turning that fiber into yarn and cloth, along with the hemisphere factories buying it, because proximity and scale are what keep those chains running at all.
The fix is arithmetic, if anyone wants it. Weight the thing. Let a dollar of U.S. fabric earn more quota than a dollar of yarn, and a dollar of yarn earn more than a dollar of raw fiber, with the schedule published so buyers can plan against it. Give the hemisphere a lane of its own. None of it takes a new statute. It takes a decision about which part of the chain the government wants to keep alive.
Washington built itself a real instrument here and so far, it’s aimed at cotton sales. A manufacturing policy would look different.
Journal edition: Pima Field & Market Journal — September 4, 2026.