President Trump’s Tariffs Backfire on US Textile Exporters

Business Impact of Tariffs - Tariffs have reduced the volume of business for Cocona Labs [1] - Uncertainty regarding ultimate pricing due to tariffs is causing customers to delay placing orders [8] - Cocona Labs absorbed a 165% tariff on exports to China, eating 10% of it [9] - China's retaliatory tariff of 145% would have been devastating to Cocona Labs [10] - Increased yarn prices due to tariffs impact the price of finished products [13] - Tariffs lead to higher costs, reduced business, and consumers ultimately paying the price [16] - A 15% to 20% effective tariff is anticipated [17] - Paying a 165% tariff on master batch exports to China, absorbing 10% of it, is unsustainable long term [19] Company Strategy - Cocona Labs is ensuring customers have options by shipping masterbatch to various countries to mitigate tariffs [18] - The company is considering moving some manufacturing to China to reduce reciprocal tariffs [18] - Cocona Labs is willing to eat a portion of the tariff, but not the entire amount [21] - The company values its employees and will take measures to avoid layoffs, including potential pay cuts [23][24] Industry & Economic Perspective - The US textile industry has declined, with employment falling from 15 million to 470000 workers as China became the leading producer [5] - There was a 165% tariff on clothing coming from Vietnam before Trump, with an additional 20% negotiated, resulting in a 365% tariff [15] - Broad brush tariffs are not considered effective; a surgical approach is recommended [26] - Non-tariff barriers in China, such as banking and marketing laws, remain a challenge for US companies [27] - Tariffs are seen as taxing inputs, alienating partners, and enraging those who control external markets, which is not a strategy for rebuilding American manufacturers [29]