“Made In USA” Label
A lot of brands claim that their products are made in the USA, but what truth does that really hold? Automobile, wool, textile, and fur product brands have specific laws that require them to disclose U.S. content–all other products can use the ‘made in USA’ label for marketing as long as they follow certain requirements listed by the Federal Trade Commission (FTC).
The FTC’s “Made in USA” policy requires brands to be transparent about the origin of the materials and processing used for production. They do so by making brands follow specific guidelines before listing a product as American made. The policy applies to U.S. origin claims that are directly stated or that are implied through symbols or context in advertising.
The enforcement policy applies to certain marketing claims
Unqualified “Made in USA” Claims
An unqualified “Made in USA” claim is when a product is “all or virtually all” made in the United States. The policy considers all 50 states, the District of Columbia, and all U.S. territories and possessions as part of this statement.
The term “all or virtually all” means that all parts and processing for the product are in the USA and the product can only contain foreign content if it is small enough to be insignificant. Most importantly, its final assembly must be in the U.S. Here is an example from the National Institute of Standards and Technology:
“A gas grill has knobs that are imported, but the rest of the grill components are of U.S. origin. An unqualified ‘Made in USA’ claim is not likely to be deceptive because the knobs make up a negligible portion of the product’s total manufacturing costs and are insignificant parts of the final product.”
In order for a company to back up its claims, they need reliable evidence that the product follows the “all or virtually all” rule. The commission mainly looks at total manufacturing costs and what percentage of that is attributed to overseas parts and processing. This includes the cost of manufacturing materials, direct manufacturing labor, and manufacturing overhead.
Companies should make sure to check with their suppliers on what percentage of their parts are truly ‘American made’. Products with foreign raw materials or other sourced parts may still be considered American made if the materials are far enough removed from the final product.
If a product follows all of these guidelines, the brand is safe to say their product is made in the USA without any restrictions.
Buy American Act — requires that a product be manufactured in the U.S. of more than 50 percent U.S. parts to be considered Made in USA for government procurement purposes. For more information, review the Buy American Act at 41 U.S.C. §§ 10a-10c, the Federal Acquisition Regulations at 48 C.F.R. Part 25, and the Trade Agreements Act at 19 U.S.C. §§ 2501-2582.
Manufacturers and marketers should be cautious about using general terms, such as “produced,” “created” or “manufactured” in the U.S. Words like these are unlikely to convey a message limited to a particular process. Additional qualification probably is necessary to describe a product that is not “all or virtually all” made in the U.S. -FTC.gov
Qualified “Made in USA” Claims
A qualified ‘Made in USA’ claim can be made when a brand includes that its product isn’t entirely American made and discloses the extent of its domestic parts and processing. For example, “Couch assembled in the USA from Italian Leather and Mexican Frame” is appropriate because it shows that the product isn’t claiming to be entirely American made. The manufacturer could also choose to include the percentage of the product that is American by making a statement like “60% U.S. Content”. “Made in USA of US and imported parts.” would be the correct Qualified Claim for this example.
When a company imports a product, U.S. Customs considers where the product’s last major finishing assembly was to define its country of origin. When Customs decides that the item is a product of a foreign country, the brand is required to disclose that information to customers even if it contains some American made parts as well.
Assembled in USA Claims according to the FTC.
A product that includes foreign components may be called “Assembled in USA” without qualification when its principal assembly takes place in the U.S. and the assembly is substantial. For the “assembly” claim to be valid, the product’s last “substantial transformation” also should have occurred in the U.S. That’s why a “screwdriver” assembly in the U.S. of foreign components into a final product at the end of the manufacturing process doesn’t usually qualify for the “Assembled in USA” claim.
California “Made In USA” Standard
Senate Bill 633, which amended Section 17533.7. The law now states that the limitation on “Made in the USA” labeling does not apply if either: (1) the part of the product produced outside of the U.S. constitutes less than 5% of the “final wholesale value of the manufactured product,”; or (2) if the manufacturer can demonstrate that “it can neither produce the article, unit, or part within the United States nor obtain the article, unit, or part of the merchandise from a domestic source” irrespective of cost, and that “all of the articles, units, or parts of the merchandise obtained from outside of the United States constitute not more than 10% of the final wholesale value of the manufactured product.”