What does it mean for a company to use a ‘Made in USA’ label?

We’ve all seen those “Made in USA” stamps on products from Wilson footballs to Igloo coolers, but it takes a lot to be able to make that kind of claim.

It’s not easy—or cheap—to manufacture products in America, but as US companies face supply-chain tumult, many are evaluating how to bring their manufacturing home. It has some benefits, among them agility to adjust to market trends and more quickly flex supply, and essentially “shrinking the supply chain” with shorter shipping distances, explained Kamala Raman, VP of logistics and supply-chain network design at Gartner.

“Having more control is a big theme that we’re seeing for why people are trying to make more products in the US,” she told Retail Brew.

As more companies look to move some or all manufacturing stateside, what consumer-facing labels or statements can they make about being American-made? When it comes to these claims, the Federal Trade Commission (FTC) is in control.

While there are statutes requiring automobiles and textile, wool, and fur products to disclose if they contain US or foreign materials, there’s no federal law that states other consumer products—like cosmetics or electronics—have to. These other goods don’t need pre-approval to use “Made in USA” claims.

• If they choose to, they have to play by the FTC’s rules—and that applies to any labeling, advertising, or IRL or online promos making express claims of American origin. (Beyond “Made in USA,” this regulation also encompasses terms like “American-made,” or in certain contexts, the use of symbols like the US flag or map.)

Ground rules

There are two types of claims companies make: unqualified and qualified. An unqualified claim is, quite simply, a claim with no qualifier, like when a product is labeled with the classic “Made in USA.” Those products must be “all or virtually all” made in the United States—with final assembly or processing occurring stateside.

So what is virtually all? There’s no set percentage, so it’s case-by-case, per the FTC. Essentially, all “significant” parts of the product must be from the US, with “no—or negligible” foreign content; the FTC considers how much of the manufacturing costs can be attributed to foreign materials, and how far removed from the final product they are.

• For example: If a lamp is made from American-made brass and lampshade, but has an imported base, a “Made in USA” claim would be misleading because the base is a pretty big chunk of the overall product, the FTC says.

Then there are qualified claims, claims that—you guessed it—have qualifiers. These would say things like “60% US content” or “Made in USA of US and imported parts.” Still, products must have a notable level of US materials or processing to make this kind of claim. Per the FTC:

• A US-assembled product that has only 3% US-made parts can’t say “Made in USA of US and imported parts,” but it can say “Assembled in the USA.”
• Other qualified claims would be: “Designed in USA—Made in Finland.”
• Plus, companies can make comparative claims about products, like a product containing more US materials than any others in the category, as long as that’s true.

Made to order: If companies use claims that skirt these rules, they’ll likely hear from the FTC. Pennsylvania-based Bollman Hat Company, for example, landed in hot water in 2018 when the FTC accused it of deceiving customers by claiming its products were American-made, but it turned out ~70% of its hats were imported.

• The FTC also called out American Made Matters, which was founded by Bollman CEO Don Rongione in 2009 and charged companies $99 a year to use its self-certified American Made Matters seal and be featured on a website of fellow manufacturers.

“We thought it was a more accessible standard for American manufacturers to adhere to,” Rongione told the New York Post at the time. The two parties reached a settlement in 2018, and while the company had to shift its own messaging and no longer claims to be “American Made,” it didn’t face any fines.

But lately, other companies haven’t been so lucky. In July 2021, the FTC codified a labeling rule that allows it to seek “redress, damages, penalties, and other relief” from those that violate its “Made in USA” regulations, with the ability to seek penalties up to $43,280 per violation. Its first action under the new regulations—against a battery company called Lithionics Battery—was settled in April of this year with a $105,319.56 civil penalty for advertising that some products were “Made in USA,” when in fact, they used a significant amount of imported components, particularly from China.