Congress quietly subsidizes cotton industry with $billions in tax credits
H.R. 7230 — Buying American Cotton Act of 2026 · Filed by Gregory Murphy (R-NC) · 98 cosponsors · Introduced Jan 22, 2026 · Referred to committee
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What it does
This bill creates a federal tax credit for companies that sell products made from U.S.-grown cotton. The credit is worth 24% of the cotton's market price if the cotton is processed only in the U.S. or in countries with which the U.S. has free trade agreements, or 18% if processed elsewhere. The credit can be doubled or increased 6.5-fold if the company uses U.S.-made cotton yarn or fabric, and requires digital tracking of cotton through the supply chain to prevent double-claiming.
Why we flagged it
The bill's operative mechanism is a tax credit—a direct reduction in federal revenue—flowing to companies that sell cotton products. Despite the 'Buying American' framing, the credit is a subsidy to textile and apparel manufacturers, not a consumer benefit or public investment.
What the text implies
- The 1.6x and 6.5x multipliers for yarn and fabric create incentives for vertical integration and domestic processing, potentially raising consumer prices for cotton goods by shifting supply-chain economics.
- The digital tracing requirement and permanent bale identification system impose compliance costs on farmers and ginners, which may be passed to consumers or reduce farmer margins.
The full analysis lists 5 implications of this text.
Who stands to gain
cotton textile manufacturers; apparel companies; yarn and fabric producers