A small line item on your entry summary with outsized compliance implications. Here is what the cotton fee actually is, why it exists, and how U.S. Customs and Border Protection (CBP) decides when to collect it.
If you import textiles or apparel into the United States, you have almost certainly seen a “cotton fee” line on CBP Form 7501. It is usually small — a few dollars here, a few cents per kilogram there — but the rules behind it confuse even experienced importers. This two-part series breaks it down.
In Part 1, we cover what the fee is, why Upland cotton is the key concept, and which HTS codes trigger collection. In Part 2, we cover the five ways to legally avoid or recover the fee and how to file each correctly.
At CustomsCity, we help importers and brokers handle these filings every day. The rules are specific, but they are not complicated once you understand the framework.
What Is the U.S. Cotton Fee?
The “cotton fee” is formally the cotton research and promotion assessment, established by the Cotton Research and Promotion Act of 1966 (7 U.S.C. 2101–2118) and implemented through 7 CFR Part 1205. It is administered by the Agricultural Marketing Service (AMS) of the USDA and collected at the time of entry by CBP under collection code 056.
Funds are forwarded to the Cotton Board, which uses them to finance research and promotion programs that increase consumer demand for Upland cotton in the United States and abroad. U.S. cotton growers pay the same assessment on domestically produced cotton, so the import assessment is designed to ensure equal treatment on both sides of the border.
How the fee is calculated. The assessment has two parts: a weight-based portion of $1 per 500-pound bale ($1 per 226.8 kilograms), and a supplemental assessment equal to one-half of one percent of the value of domestically produced Upland cotton. AMS adjusts the combined per-kilogram rate each year based on the prior calendar year’s weighted average price received by U.S. farmers. Effective March 1, 2026, the combined rate is $0.012388 per kilogram of cotton content.
What Is Upland Cotton, and Why Does It Matter?
The entire program turns on one word: Upland. Under 7 CFR 1205, Upland cotton means all cultivated varieties of the species Gossypium hirsutum L. It is the dominant commercial cotton species worldwide — accounting for roughly 90% of global production — and it is also the dominant variety grown in the United States. It has a shorter-to-medium staple length (typically 7/8 to 1-1/8 inches) and is the workhorse fiber in most apparel, denim, home textiles, and industrial fabric.
When someone refers to “cotton” without qualification in a trade or commercial context, they almost always mean Upland.
What is not Upland? The most commercially significant non-Upland category is Extra-Long Staple (ELS) cotton — the species Gossypium barbadense — with a staple length of 1-3/8 inches or longer and a finer, more premium fiber. You’ll see ELS marketed under familiar names:
- Pima — the U.S. name for domestically grown ELS, primarily from California, Arizona, New Mexico, and Texas.
- Supima® — a trademark certifying 100% American Pima, licensed by the growers’ association.
- Egyptian cotton — ELS grown in Egypt, most of which is Gossypium barbadense. Note the label is often misused in retail, which is why documentation matters.
- Sea Island cotton — a historical ELS variety from the Caribbean and U.S. Southeast coast, now produced in limited quantities.
Other non-Upland species (Gossypium arboreum and Gossypium herbaceum, sometimes called tree cotton or Levant cotton) are rare in U.S. imports but also fall outside the assessment.
Why does the program target Upland specifically? Because it was created to fund research and promotion that benefits U.S. Upland growers. Congress and AMS set it up so that imported Upland — and the Upland content of imported products — pays into the same program at the same rate as domestic Upland. ELS/Pima has its own separate industry body and is not part of this assessment.
Who Pays, and Which HTS Codes Trigger the Fee?
The importer of record is legally responsible for the assessment. CBP collects it at entry under the agreement between CBP and USDA, and it appears on CBP Form 7501 under collection code 056.
What actually triggers collection is the HTS classification. The Import Assessment Table at 7 CFR 1205.510(b)(3) lists more than 2,300 HTS statistical reporting numbers covering raw cotton, yarns, fabrics, and cotton-containing apparel and home textiles. The table was expanded substantially in 2011 specifically so that the program would capture close to 100% of cotton in U.S. imports, mirroring the near-total coverage of the domestic producer assessment. If your line item is classified under one of these listed HTS numbers, CBP automatically assesses the fee based on the published conversion factor for that HTS, which estimates cotton fiber content per kilogram of the imported article.
Here is the subtle point that trips up most filers. With one important exception, the U.S. Harmonized Tariff Schedule generally does not distinguish between Upland and non-Upland cotton at the classification level. The exception is raw cotton in heading 5201, where subheadings break out staple length tiers (under 28.575 mm, 28.575 mm to under 34.925 mm, and 34.925 mm or more) that functionally separate Upland from ELS/Pima. For yarns, fabrics, and finished textiles and apparel, that distinction disappears: a 100% Pima bed sheet and a 100% Upland bed sheet usually share the same HTS number. So the Import Assessment Table is built on a broader rule: if a product is classified under an HTS that could contain cotton, CBP collects the assessment by default — and the Upland-versus-non-Upland question is resolved through documentation, not through the HTS code itself.
Origin is not the trigger either. Another common misconception is that the fee only applies to U.S.-origin cotton. The opposite is true: the assessment applies by default to imported Upland cotton regardless of where it was grown or processed. Importers whose shipments contain U.S.-grown cotton or non-Upland cotton have exemption and reimbursement rights — but those are resolved through specific procedures, which we cover in Part 2.
The Practical Takeaway
Three things to hold onto from Part 1:
- The cotton fee is a USDA program assessment collected by CBP that funds research and promotion for U.S. Upland cotton growers.
- Only Upland cotton (Gossypium hirsutum L.) is within the program’s scope. Pima/ELS, Egyptian, and other non-Upland species are not, but that distinction is resolved through documentation, not HTS classification.
- If your HTS code is on the Import Assessment Table, CBP will collect the fee by default at entry. Whether you owe it ultimately depends on the facts of your shipment and the exemption process.
That exemption process — the five ways to legally avoid or recover the cotton fee, the documentation required, and how to file it correctly through ABI and ACE — is the focus of Part 2 of this series.
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