By Sunday, Colombia had quietly emerged as a haven for multinational brands seeking a stable place to manufacture products in a time of geopolitical and environmental upheaval.
President Trump's threat to increase tariffs on Chinese imports is forcing companies to reduce their reliance on Chinese factories.
Companies are establishing factories closer to the United States, a trend known as nearshoring. Mexico had become a popular travel destination, but Trump's pledge to impose tariffs on Mexican imports also posed risks to that strategy.
By contrast, Colombia seemed safely removed from Mr. Trump's focus. Since 2018, about $7.6 billion in foreign investment has been invested in more than 300 projects in Colombia related to nearshoring, according to the government's trade agency ProColombia. U.S. companies account for more than 40% of all foreign investment, making it the largest single source of investment.
“Nearshoring is not just a fad,” said Todd Fagley, CEO of MedSource Labs, a Chanhassen, Minn.-based medical device company that opened a factory in Columbia three years ago. speaks. “The world is only going to get harder to navigate,” he added.
But Fagley did not expect what happened Sunday afternoon.
President Trump was furious that Colombia refused to allow a U.S. military plane carrying deported immigrants to arrive, and he declared a 25% tariff on all imports from Colombia. Hours later, the White House declared victory, announcing in a statement that the Colombian government had agreed to “unrestricted admission of all illegal aliens from Colombia.” The statement added that the tariffs are “on hold.”
For now, commerce will likely continue unhindered. But the episode highlighted the growing complexity of international trade, with Trump using the threat of tariffs as a major policy tool.
Fagley, 54, co-founder of MedSource, was already used to the volatile restructuring of global supply chains. A competitive triathlete with an Ironman under his belt, he's not one to sit around and wait to see what happens next. Since founding the company in 2002 with the help of a $75,000 second mortgage on his wife's home, he has moved frequently around the world as circumstances change.
Initially, MedSource relied almost exclusively on factories in China. During his first visit to the country in the early 2000s, Fagley learned that emergency medical kits used by first responders were available for about one-tenth the price in the United States. As MedSource expanded into other products, it came to rely on 20 factories in China for approximately 95% of its production.
In 2014, MedSource developed a new type of IV tube and outsourced manufacturing to a partner factory in Jiangsu Province, China. A few months later, while at a trade show, Fagley was stunned to see a prototype of his new product displayed by another Chinese company.
Alarmed by what appeared to be brazen theft of intellectual property, Faghrey moved production of the new device to India.
Two years later, he purchased a factory near Bloomington, Indiana, to expand his line of intravenous products. Although he relished the marketing potential of manufacturing products in the United States, the financial results were another matter.
“We lose money every year,” he said, blaming higher wages for Americans and the cost of complying with domestic regulations. He eventually closed the factory and moved production to India.
A confluence of events during that time reinforced his desire to reduce dependence on China. During Trump's first term, he imposed tariffs on hundreds of billions of dollars worth of Chinese imports. President Joseph R. Biden Jr. promoted that policy.
Then the pandemic broke out in China, halting production of key MedSource products. When Chinese factories resumed production at the end of 2020, a surge in orders from factories overwhelmed the shipping industry, sending prices soaring.
MedSource frequently shipped parts from its factories in China to its plant in Minnesota, where they were assembled into finished products. Before the pandemic, it cost an average of $4,000 to ship a container from Shanghai to Minneapolis. By early 2021, the same distance traveled had increased by up to 10 times.
“This was not a sustainable future,” Fagley said. “People were starting to realize the vulnerabilities in the supply chain.”
As he and his team figured out how to respond, they came to the conclusion that some orders from the factory needed to be moved closer to the United States. Fagley thought Mexico would be a good option. His team visited Costa Rica, but the labor force was too small. They considered the Dominican Republic.
MedSource's Lebanese partners then introduced the company to Elias Dafach Saker, an ambitious entrepreneur born and raised in Cartagena.
Mr. Duffach's grandfather came from his native Syria in the 1930s to farm in this city of glittering skyscrapers atop a Spanish colonial fort on a peninsula jutting into the Caribbean Sea.
Mr. Duffach, 55, worked at his family's restaurant before taking a sales job at a company that makes syringes. He studied at a community college in Ohio, so he spoke English fluently. In May 2021, he flew to Minneapolis to meet Mr. Fagley.
It did not immediately seem like a solution to Colombia's over-reliance on China. In the American popular imagination, this country is more associated with coffee and armed conflict than with industry. However, Mr. Dafak offered an updated opinion to MedSource. Colombia is a country of 52 million people, and despite ongoing armed conflict in some areas, development is progressing.
Cartagena was home to one of the largest container ports in South America and included a connection to Jacksonville, Florida, where MedSource had a distribution center. The trip could be completed in just one week, compared to four weeks from China to the east coast.
The city was also a hub for the oil industry, centered on large-scale refineries. This meant that the company held inventories of plastic, a key material derived from petroleum.
MedSource soon formed a joint venture, with Mr. Daffach in charge. Production will begin at a leased factory in 2022, starting with disposable sheets for ambulance stretchers. The following year, the company moved to its own space within the free trade zone.
Fagley said the cost of manufacturing products at the Colombian plant was typically within 10 percent of the cost of manufacturing in China. Previously, that gap was unsustainable. But the world's experience with shortages of critical goods such as medical masks, medicines and ventilators during the pandemic has changed the calculus.
The value of greater resilience was amplified in late 2023, when Yemen's Houthi rebels began firing missiles at ships in the Red Sea in solidarity with Palestinians under Israeli attack in Gaza. This effectively closed the Suez Canal, a key artery connecting Europe and Asia.
That same year, a drought in Central America caused water levels in the Panama Canal to drop, forcing canal regulators to restrict shipping.
One morning this month, as Mr. Fagley stood inside the factory, surveying the floor from the mezzanine, 30 women were hopping over rotating sewing machines, spun synthetic fibers into medical equipment that had previously been made in China. A ribbon was sewn on.
Some stretchers purchased by the U.S. military have handles attached to the sides. Some people sewed disposable sheets. Maricelis Pajaro, 41, was part of a team building a cuff to prevent contamination during blood pressure tests.
Before joining the factory three years ago, Pajaro supported her family with part-time sewing jobs, earning perhaps $100 a month. She lived on a dirt path in the town of Turbana. Dengue-infected rats, snakes, and mosquitoes frequently invaded the rotten planks of her wooden home. Rain seeped through the rusted metal sheets of the roof. Every time there was a storm, she worried that her house would collapse.
At the factory, her income was tripled. Her daughter (21) and son (20) also worked at the factory. Thanks to their collective wages, they were able to build a brick house a block away. They bought motorcycles and trudged to the town square before dawn, turning a 40-minute bus commute into a 20-minute straight trip on their own wheels.
“I had never had a stable income before,” Pajaro said. “I feel much more secure.”
When Fagley and Duffach considered how quickly to expand their business, they paid close attention to whether the supplies they needed were available locally. The Bogota factory, the company's largest fabric supplier, sources almost all its raw materials from within Colombia, minimizing the chance of delays.
Mr. Duffach had planned to begin manufacturing medical gowns later this year. The American customer wanted 4 million a year. Mr. Duffach preferred to start at 1 million to ensure quality standards were met.
The company was planning to add a second floor to its factory, but first needed clarity on available tax incentives.
On a recent afternoon, Mr. Faghly and Mr. Daffach visited Cartagena's mayor, Dumek Turbay, in the colonial-era customs building that serves as city hall, asking for help in running the bureaucracy.
Turvey pointed out that Cartagena's port began as an entry point for Spaniards arriving in search of valuable goods. It grew as a gateway for slaves brought from Africa. Today, the same port is at the center of plans to develop the wealth of local residents, he added.
“This is an opportunity,” Turvey said.
Mr. Faghly and Mr. Dafak then toured the port's largest container terminal. They were briefed on the intention to expand the port. They found comfort in the map in front of them. A dotted line connects Cartagena with ports along the east coast of the United States. This was a corridor that avoided both the Panama Canal and the Suez Canal, and it was a corridor where it was unclear what would happen next in the relationship between the United States and China.
“In a volatile world, we couldn't be safer,” Fagley said.
But less than two weeks later, Mr. Trump complicated that argument, reminding us that anything related to trade will be fraught with uncertainty during his term.
By then, Mr. Faghly was attending a trade show in Dubai and meeting potential partners in the United States and around the world.
“What is most important to us is the safety of the patients we serve and the U.S. supply chain for critical medical devices,” Fagley said in a text message late Sunday, adding that the company “remains flexible in its strategy.” Ta.
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