What Does "Made in the USA" Mean?
"Made in the USA." It's a label that carries an unspoken promise of quality with an undertone of job security for American workers. But the rules for attaching that label are far more complex than most consumers realize.
The official definition of a "Made in the USA" label as set forth by the Federal Trade Commission (FTC) requires that a product labeled and advertised as "Made in the USA" be entirely or virtually entirely made in the United States.
The rules for a "Made in the USA" label on a product are very specific. And the details are spelled out in a 40-page FTC document titled "Complying with the Made in the USA Standard."
Key Takeaways
- For a product to have a "Made in the USA" label, it must meet specific criteria outlined by the Federal Trade Commission.
- Products that don't quite meet the "Made in the USA" standards are often labeled as "Assembled in the USA" or "Made in the USA from domestic and imported parts."
- There is no law requiring disclosure of the percentage of a product's content that was made in the United States, except for textiles, wool, fur products, and automobiles.
- Many American consumers prefer to buy American products, whether from a concern about quality or out of patriotic feeling.
Implications of "Made in the USA"
With a few exceptions, no law requires disclosure of the percentage of a product's content that was made in the United States. The exceptions are automobiles, textiles, wool, and fur products,
Companies that choose to make such disclosures must follow the standards outlined in the FTC's "Made in the USA" policy.
The underlying definition of the standard requires that "all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no—or negligible—foreign content." The policy's definition of the United States includes the 50 states and the District of Columbia as well as all U.S. territories and possessions.
The product's final assembly or processing must take place in the United States. The FTC also considers other factors, including how much of the product's total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the finished product.
In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product's overall processing. The same can be true for some foreign parts.
From a marketing standpoint, labeling has power, and a "Made in the USA" label may invoke feelings of nationalism, support for American workers, and the implication of buying a high-quality product.
The guidelines use a gas grill sold in the United States as an example. If the knobs and tubing, which are minor components of the grill, are imported from Mexico, the product can still include the "Made in the USA" label.
On the other hand, a lamp made with an imported base does not qualify, as the base is a significant component of the finished product. Determining whether a product meets the standard must also involve an evaluation of the cost of manufacturing the product, including materials and labor.
Qualified and Comparative Claims
Products that do not meet the requirements for an unqualified claim may choose to advertise the percentage of their content sourced from the United States or the fact that they have been assembled in the United States. "Assembled in the USA" or "Made in the USA from domestic and imported parts" are examples of qualified claims.
In order to claim assembly in the United States, the standards require that the item be "substantially transformed" by the manufacturing process. Products that are manufactured abroad, imported, and then put together via simple screwdriver assembly do not generally qualify for a claim of "Assembled in the USA."
Advertisers interested in comparing their products to competitors' products through claims such as "We use more U.S. content than any other cellular phone manufacturer" must also comply with the stated standards. In particular, the difference between the products must be substantial.
Certification Is Not Simple
The variety of potential distinctions requires a complex set of guidelines. Overlapping regulations on this topic add further confusion.
For example, the Textile Fiber Products Identification Act and Wool Products Labeling Act mandate that textile, wool, and fur products disclose the percentage of their contents that were sourced in the United States. The American Automobile Labeling Act has similar requirements for vehicles.
The U.S. government has a completely different standard when it comes to the items it purchases. According to the Buy American Act, a product must "be manufactured in the U.S. of more than 50% U.S. parts to be considered Made in the USA for government procurement purposes."
The U.S. Customs Agency has its own set of requirements that pertain to imported goods. Under these requirements:
If a product is of foreign origin (that is, it has been substantially transformed abroad), manufacturers and marketers also should make sure they satisfy Customs' markings statute and regulations that require such products to be marked with a foreign country of origin. Further, Customs requires the foreign country of origin to be preceded by "Made in," "Product of," or words of similar meaning when any city or location that is not the country of origin appears on the product.
Enforcement is another issue altogether. The FTC has no proactive efforts to ensure compliance with itss labeling guidelines. Rather, enforcement relies on responding to specific complaints. Aggrieved parties are instructed online to contact "the Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, your state Attorney General, or the Better Business Bureau."
A consumer may sue the company making the fraudulent claim if it can be proved that it caused damage.
The sheer number of potential entities with which a consumer can file a complaint suggests that achieving satisfaction may be a formidable task.
Why the Label Matters
A legitimate "Made in the USA" label is meant to stir a sense of national pride and imply a high level of quality as well as the promise of well-paying jobs for Americans.
The long decline of the U.S. manufacturing sector and the detrimental effects of the outsourcing of manufacturing jobs to third-world countries have resulted in a high level of emotion and sensitivity around this topic.
Labels that read "Made in China," among other countries, can trigger bad feelings about the decline of the American working class, lower safety and quality standards, substandard working conditions, and corporate greed.
Is There a Difference Between 'Made in the USA' and 'Made in America'?
A marketing professional could point out that "Made in America" has a bit of wiggle room. Canada and Mexico are in North America as well. If you're uncertain, go to the manufacturer's website and check under "About Us".
Does the U.S. Government 'Buy American?'
Yes. Federal government agencies are under orders to buy American whenever possible. President Joe Biden imposed an executive order to that effect during his first week in office.
If It's Not 'Made in the USA' How Do I Know Where It Was Made?
A numbler of laws dating back as far as 1930 require manufacturers and retailers to label their products with the country of origin. A law specific to automobile manufacturing requires the disclosure of every country that contributed 15% or more of the vehicle's parts.
The Bottom Line
Domestic versus foreign production is also a national and economic security concern. While inexpensive t-shirts, steel, and electronics are appealing to the wallet, there are real questions about how the U.S. could produce guns, aircraft, and sensitive electronics should the nations it now relies on for imports suddenly become adversaries.
While the spread of globalization has resulted in an interconnected global economy, there are a variety of reasons why a concerned minority of the country's population strongly believes in the mantra, "If you sell it here, build it here."
