As cotton production fell in 2025, the textile industry in Arizona, New Mexico, and Texas awaits unpredictable trade policies and increased expenses.

The textile business in the Southwest United States is poised to face a time of gravity. As production of cotton keeps declining in 2025, producers and trade experts throughout Arizona, New Mexico, and Texas increasingly worry about the prospects of the Generalized System of Preferences Plus (GSP+). The trade program, through which importing duty-free products from certain partner nations is permitted, is a major factor in ensuring textile product costs remain competitive. But with fewer U.S. cotton supplies to go around and increasing international demand, that equilibrium is now at risk.

Cotton Shortages Hit the Heart of the Industry

Cotton has been a pillar for the Southwest economy for a long time. In Texas, in particular, cotton is a significant crop and an important component of state and local economy. But since weather patterns have changed, there are constant droughts, and production costs are higher, the yield has significantly decreased in 2024 and continues to stay low in 2025.

This dip has had ripple effects across the region. Textile firms, big and small, are racing against time to adapt to a new reality: restricted supply of cotton, increased prices, and shorter timeframes.

In Arizona and New Mexico, which are more dependent on the importation of cotton and processed goods than on raw cotton production, the issue is slightly different. These states have a number of small- to mid-sized apparel and textile manufacturing companies that rely on imported cotton products made cheaper by the GSP+ program.

What’s at Stake with GSP+?

The GSP+ trade preference program benefits the U.S. economy by lowering tariffs on imports—particularly textiles and cotton-related items—from eligible countries. It maintains prices at lower levels for American retailers and importers, enabling them to set fair prices and stable supply chains.

But with declining U.S. cotton output, there is mounting pressure to rethink how the system operates. If policymakers make a decision to realign GSP+ rules to emphasize domestic sourcing or place new limits on imports, the textile industry in the Southwest can expect to take a hit.

“GSP+ has kept us alive throughout global disruptions,” a supply manager at a mill along the El Paso border noted. “If anything is altered, we could be facing serious layoffs and rising costs.”

Higher Costs, Fewer Choices

In 2025, Southwest textile companies are already experiencing the cost pinch. Cotton prices have gone up more than 20% from last year, and there are fewer domestic suppliers to provide the needed supplies.

Producers are having to make the tough decisions: cut product lines, increase prices, or look to other fabrics. Others are trying blends with recycled fiber, hemp, or synthetics. These alternatives, however, also pose their own challenges—sourcing, quality, and consumer acceptability.

A small Tucson-based sportswear manufacturer reported that they’ve begun incorporating more polyester into their products. “It’s not perfect, but we have to make do or lose customers altogether,” the owner said.

Logistics and Trade Hubs Brace for Change

The Southwest is also home to critical logistics centers—ports along the Texas Gulf Coast, rail centers in New Mexico, and large trucking routes across Arizona. A change in GSP+ status could transform what is shipped, how frequently, and at what price.

If tariffs rise, fewer textile imports may come through these trade routes, affecting jobs and freight operations tied to this flow. That’s especially troubling for places like Laredo and Nogales, which see high volumes of textile-related cargo.

“We’ve already seen a slowdown in certain fabric imports,” noted a logistics manager in Phoenix. “If GSP+ changes, it could cut those numbers in half.”

Small Businesses Struggle the Most

Though major producers can adapt, small enterprises are more exposed. Family-owned textile stores, bespoke clothing producers, and regional retail brands in the Southwest lack the wherewithal to easily switch gears from supply chain interruptions or cost increases.

In places like Santa Fe and San Antonio, some business owners say they are simply hoping prices stabilize in the coming months. Others are bracing for potential price markups or are looking into sourcing from alternate regions—even if that means higher shipping costs.

The Road Ahead

The Southwest’s textile industry is keeping a close eye on Washington. Business leaders and industry groups are pressuring trade officials to come out with plain talk on the future of GSP+ and whether cotton-related products will continue to be sheltered under the program.

Others also want federal aid or subsidies to businesses hardest hit by shortages of cotton, including tax relief or assistance in material innovation.

Something is certain: the coming months will be decisive. What the U.S. does with cotton-based trade policy may well decide whether the Southwest’s textile industry becomes ever more robust—or begins to come apart at the seams.

Final Thought

In 2025, the Southwestern textile industry is at a crossroads. Cotton deficit and GSP+ volatility are compelling companies to recast supply chains, prices, and product strategies. If the leaders move smartly and in a timely manner, this test may also be an opportunity to innovate and remake better, more resilient textile businesses for the future.