Cotton diplomacy is when a country uses its production and sale of cotton as a way to influence other countries. Imagine you have a big bag of your favorite toys that all the other kids in the neighborhood really want. You might use your toys as a way to get the other kids to do what you want, like sharing their snacks or letting you choose the game to play.
In the same way, a country that produces a lot of cotton might use that cotton as a way to convince other countries to do what they want. For example, if a country that produces a lot of cotton wants another country to agree to a certain trade deal, they might threaten to stop selling them cotton if they don't agree to the deal. The other country might really need the cotton, so it might be more likely to agree to the deal.
Cotton has been a valuable commodity for many years, so it can be a powerful tool in diplomacy. But just like with your toys, using cotton diplomacy can sometimes make other countries upset or angry, so countries have to be careful when they use it.