Context:

Cocona Labs, a Colorado-based company producing compounds for textiles, faces potential relocation of its production to China due to the trade war initiated by the Trump administration. Despite Trump's tariffs being intended to bring manufacturing jobs back to the U.S., the increased costs and retaliatory actions by China have made domestic production less viable for Cocona. CEO Jeff Bowman notes that the U.S. lacks comparable infrastructure to China for textiles, which complicates the possibility of shifting production back home. The volatility in tariffs has led to a halt in orders across the supply chain and forced Cocona to explore shifting production stages to Asia to avoid tariffs. This situation exemplifies the unintended consequences of trade policies, which may result in the opposite effect of their intended purpose of repatriating jobs.

Dive Deeper:

• Cocona Labs, based in Colorado, produces compounds used in textiles, which are primarily sent to China for manufacturing into finished goods, some of which return to the U.S. for sale. The company faces the challenge of potentially moving production to China due to the economic impact of tariffs.

• CEO Jeff Bowman is considering relocating parts of Cocona’s production to China or India to circumvent tariffs, despite the administration's intent to repatriate manufacturing jobs to the U.S. The company has longstanding partnerships in China that are difficult to replace due to China's superior textile infrastructure.

• The escalation of tariffs, with the U.S. raising them to 145% and China responding with 125% on American imports, has created uncertainty in the market. Although recent negotiations have lowered these tariffs, the instability has caused Cocona’s customers to delay purchases.

• Jeff Bowman, with a background in mountaineering and fabric technology, emphasizes that the current trade policies could inadvertently lead to outsourcing, contradicting the intended goal of the tariffs. The company has been forced to reconsider its business strategy and is delaying new projects and product developments.

• Cocona's operations are based on a process involving the conversion of minerals from the American Southwest into particles in the Mid-Atlantic, which are then transformed into master batch compounds in the Upper Midwest and Southeast. These compounds are crucial for the company’s textile products and are heavily affected by the tariffs on imports and exports.