The Made in America Cotton Act
Purpose and Findings
The purpose of the Made in America Cotton Act is to strengthen the U.S. economy by promoting a fully domestic cotton-to-clothing supply chain. This legislation would support American farmers, boosts domestic manufacturing, and provide a direct cost savings to U.S. consumers, all while reducing environmental impacts and encouraging sustainable business practices.
We The People Find:
The United States is a significant player in the global cotton industry, contributing approximately 12% of the world’s cotton production as of 2022. This positions the U.S. as the third-largest cotton producer, following China and India. Notably, the U.S. leads in cotton exports, supplying more than 35% of the world’s raw cotton export market. The United States exports a substantial portion of its cotton production. In the 2021 marketing year, U.S. cotton exports accounted for one-third of the global market’s value, totaling nearly 3 million metric tons. This volume represented approximately 85% of the U.S. cotton crop, indicating that the majority of domestically produced cotton is sold to international markets. Major destinations for U.S. cotton exports include China, Vietnam, Turkey, Pakistan, and Mexico. In recent years, the United States has exported approximately 85% of its raw cotton production. For instance, in 2023, U.S. cotton exports totaled $5.95 billion.
If the U.S. manufactured finished cotton products domestically instead of exporting raw cotton, the potential economic returns could include:
• Total Revenue from Finished Goods: $18 billion to $24 billion annually.
• Additional Domestic Profits: $1.8 billion to $3.6 billion for manufacturers.
• Job Creation: Up to 92,000 jobs, leading to $4.23 billion in new wages.
• Tax Revenues: $2-3 billion in additional tax revenue.
Overall, retaining and processing cotton domestically could generate $12 billion or more in net economic benefits, compared to the current $5.95 billion in raw cotton exports. This shift could significantly boost the U.S. economy, increase jobs, and reduce reliance on imported finished cotton products.
Section:
Section 1: Supporting American Cotton Farmers
Objective: Ensure American cotton farmers earn higher revenues per bale by providing direct access to U.S.-based clothing manufacturers.
1. Direct Market Access Grants: Establish grants to help farmers and cotton cooperatives establish direct sales partnerships with domestic textile manufacturers. By eliminating middlemen, farmers can increase their earnings by 10-20% per bale.
2. Local Production Hubs: Invest in creating cotton processing and textile manufacturing hubs near key cotton-growing states, reducing transportation costs and enhancing local economies. These hubs will ensure:
• Reduced costs for farmers on logistics and transportation.
• Economic opportunities in rural communities.
3. Guaranteed Fair Pricing Programs: Develop programs that protect farmers from volatile market prices, allowing them to negotiate stable, fair prices directly with manufacturers and ensuring long-term income security.
Section 2: Enhancing Savings for American Consumers
Objective: Pass cost savings to consumers through direct-to-consumer (DTC) sales, vertical integration, and reduced reliance on imports.
1. Domestic Vertical Integration Tax Incentives: Offer tax incentives to U.S. companies that integrate cotton growing, processing, textile manufacturing, and garment production domestically. By streamlining the supply chain, this Act aims to:
• Reduce clothing retail prices by an estimated 15-25%.
• Lower the cost of a typical $50 cotton garment to approximately $37-$42, saving consumers around $8-$13 per item.
2. Direct-to-Consumer (DTC) Support Programs: Encourage U.S. clothing manufacturers to adopt DTC models, reducing traditional retail markups. With fewer intermediaries, consumers can save an estimated 20-30% on their purchases.
3. Subscription and Bulk Purchasing Options: Develop programs to support subscription and bulk purchasing for essentials like T-shirts and socks, enabling further savings for consumers while securing a stable market for domestic manufacturers.
Section 3: Economic Impact and Job Creation
Objective: Boost job creation across agriculture, manufacturing, and retail sectors through domestic-focused industry development.
1. Job Creation in Cotton Processing and Textile Manufacturing: Establish textile production centers in the U.S., especially in Southern cotton-growing regions. By manufacturing and producing garments domestically, this Act aims to create thousands of jobs across various sectors.
2. Investment in Modernized Manufacturing: Fund grants and low-interest loans for companies investing in advanced, automated manufacturing facilities. These facilities will reduce costs, increase productivity, and enhance the competitiveness of American-made clothing.
3. Enhanced Supply Chain Coordination and Demand Forecasting: By utilizing data analytics and demand forecasting, manufacturers can avoid overproduction and reduce waste, leading to lower per-unit costs. Efficient inventory management will help keep prices down by optimizing production to meet consumer demand without excess.
4. Sustainable Practices Incentives: Encourage manufacturers to adopt sustainable practices, reducing waste and emissions through tax credits and grants. This includes incentives for recycling and environmentally-friendly production, aligning with eco-conscious consumer values.
Section 4: Environmental and Economic Sustainability
Objective: Reduce the environmental impact of the cotton-to-clothing supply chain by cutting transportation distances and energy use.
1. Reduced Carbon Emissions: Domestic manufacturing eliminates the need for global shipping, reducing greenhouse gas emissions. By sourcing cotton and producing garments locally, the Act supports sustainable production practices and reduces the overall carbon footprint.
2. Increased Economic Resilience: A fully American-made supply chain enhances economic resilience, reducing dependence on volatile global markets and foreign manufacturing. This resilience will protect American consumers and farmers from the impacts of international trade disruptions.
Section 5: Implementation and Review
1. Annual Reporting: The Department of Agriculture and the Department of Commerce will jointly publish an annual report assessing the impact of this Act on farmer earnings, job creation, consumer savings, and environmental sustainability.
2. Five-Year Review: A comprehensive review of the Act will be conducted every five years, with findings reported to Congress, ensuring that the legislation meets its intended economic and environmental goals.
Expected Outcomes
• Increased farmer Earnings: By cutting out intermediaries and establishing direct partnerships, cotton farmers will see a 10-20% increase in earning per bale.
• Consumer savings: American consumers will benefit from cost saving of 15-25% on U.S. -made clothing items, translating to $8-$13 saving per typical garment and $75-$125 annually for those spending $500 on cotton clothing.
• Economic Growth and Job Creation: Thousands of new jobs will be created in U.S. cotton processing, textile manufacturing, and garment production industries, revitalizing American manufacturing.
The Made in America Cotton Act represents a comprehensive approach to supporting American farmers, delivering consumer savings, and promoting sustainable, domestically-produced clothing. By fostering a fully integrated, U.S.-based cotton-to-clothing supply chain, the Act will strengthen the American economy and deliver lasting benefits to both producers and consumers.
Potential economic impact of the Made in America Cotton Act in terms of GDP growth and job creation considers several factors, including increased domestic production, job creation across the supply chain, and multiplier effects on the broader economy:
- Contribution to GDP
Currently, the U.S. textile and apparel industry contributes approximately $70 billion annually to the U.S. GDP. A domestic, vertically-integrated cotton-to-clothing pipeline could boost this contribution by:
• Increased Domestic Production: By bringing more textile and garment production back to the U.S., the Act could increase overall production value by 10-15%. This would add roughly $7-10 billion to the U.S. GDP annually, assuming full integration of the supply chain.
• Export Opportunities for High-Quality, American-Made Goods: A boost in “Made in America” branding could increase demand abroad, particularly in markets where U.S.-made goods are valued for quality. Assuming a 5-10% increase in exports, this could add an additional $2-3 billion annually.
Estimated Total GDP Increase: $9-13 billion annually from increased domestic production and export potential.
- Job Creation
Bringing cotton processing, textile manufacturing, and garment assembly back to the U.S. would create jobs across various sectors. Here’s a breakdown:
• Agriculture and Cotton Processing: Increased demand for domestically processed cotton could create jobs in cotton ginning, processing, and quality control. Assuming each hub employs around 500 workers across several cotton-producing states, this sector could create 5,000-7,000 jobs.
• Textile Manufacturing: Revitalizing textile manufacturing with automated, modern facilities would create jobs in operating, maintaining, and managing these facilities. Each facility could employ an estimated 1,000-1,500 workers. If 10-15 large textile hubs are established, this could result in 10,000-15,000 jobs.
• Garment Manufacturing: Direct manufacturing of clothing items would create jobs for machine operators, supervisors, designers, and logistics personnel. With a focus on automation, each facility might employ around 500-1,000 people. If 10-20 facilities are established, 5,000-10,000 jobs could be created in garment manufacturing.
• Logistics, Distribution, and Retail: Domestic production would also generate additional jobs in transportation, warehousing, and distribution. This impact could contribute an estimated 3,000-5,000 jobs across the supply chain.
Total Estimated Job Creation: 23,000-37,000 jobs across agriculture, textile manufacturing, garment production, and logistics.
- Multiplier Effect on the Economy
The new jobs and increased domestic production would have a multiplier effect, benefiting local economies and supporting secondary industries (e.g., machinery, maintenance, and supply services). Each job in manufacturing typically creates around 1.5 additional jobs in related industries, leading to an additional:
• 35,000-55,000 indirect jobs created in sectors supporting textile and garment production.
Summary of Potential Economic Impact
• GDP Growth: Estimated $9-13 billion increase in annual GDP
• Job Creation: 23,000-37,000 direct jobs and 35,000-55,000 indirect jobs across the
economy, totaling up to 60,000-92,000 jobs.
• Income creation: between 60,000 and 92,000 jobs, with an estimated average gross income of $46,000 to $50,000 per job, this would contribute roughly $2.76 to $4.6 billion in new annual income to the U.S. economy. This added income, when spent, would further stimulate economic growth and support local businesses, creating a multiplier effect that strengthens economic resilience and community well-being.
• Federal Income Tax Revenue: With an average tax rate of about 15% (considering varying income levels and deductions), the new income could generate:
• $414 million to $690 million in federal income tax revenue per year.
• Payroll Taxes: Payroll taxes for Social Security and Medicare are around 7.65% for employees and employers each, totaling 15.3%. From new income, this would contribute:
• $422 million to $704 million in payroll tax revenue annually.
Total Estimated Tax Revenue: $836 million to $1.39 billion annually
- GDP Growth and Corporate Tax Revenue
With the Act potentially adding $9 billion to $13 billion in GDP through increased domestic production and export potential, additional corporate tax revenue could be generated:
• Corporate Tax Revenue: Assuming an effective corporate tax rate of around 21%, this could result in approximately:
• $1.89 billion to $2.73 billion in corporate tax revenue annually.
- Total Potential Contribution to Debt Reduction
By combining the tax revenue from both personal income and corporate taxes, the total annual tax revenue from the Made in America Cotton Act could be:
• $2.73 billion to $4.12 billion per year
If this revenue were allocated solely to paying down the national debt, it would make a modest contribution relative to the national debt, which exceeds $33 trillion. The impact over time:
• In 10 years: $27.3 billion to $41.2 billion could be contributed to debt reduction.
• In 20 years: $54.6 billion to $82.4 billion.
Long-Term Economic Benefits
In addition to these immediate impacts, the Made in America Cotton Act could drive long-term economic benefits, including:
• Increased U.S. Economic Resilience: Reducing dependency on international suppliers strengthens the economy against global disruptions.
• Enhanced Innovation in Manufacturing: Investments in automation and sustainable practices may set the stage for other industries to bring production back to the U.S., boosting competitiveness.
These economic gains would make a meaningful contribution to the U.S. economy while providing lasting benefits for American workers and consumers.
