A common interpretation of the refrain is that the text is a description of a series of three successive real dips in time: first I dip, then you dip, then we dip. However, an alternative interpretation can be derived by understanding the text as a logical statement: when I dip and you dip, that means we dip. In this interpretation, the word “when” serves as a key indication of coincidence-in-time of the “I dip” and the “you dip”, which leads to the conclusion “we dip” (i.e. “co-dipping”).
I’d like to add that my husband wished out loud that this song was about Fun Dip.