Does “Made in USA” Really Mean Made in the USA?

The Legality Behind Claiming “Made in USA”

During his 2016 Presidential campaign, Donald Trump has reignited the debate about whether U.S. businesses should manufacture more products in the United States. Of course, while criticizing companies like Apple and Ford Motor Co. for making products overseas, Trump critics have also raised questions about whether his campaign hats and t-shirts are truly made in America.

How many US goods are actually “Made in USA”?

By way of example, according to the American Apparel & Footwear Association, 97 percent of apparel and 98 percent of footwear sold in the United States are manufactured overseas. However, consumer demand for American-made clothing and shoes has grown in recent years.

Consumer demand for American-made products has grown in recent years.

Additionally, the demand for U.S. made high-end goods such, as guitars, basses and boutique music instrument amplifiers has increased as well. For businesses that do make their goods in this country, being able to use a “Made in USA” label can be a very successful marketing tool. However, it is imperative to play by the rules.

What does “Made in USA” mean?

Under Federal Trade Commission (FTC) guidance, “Made in USA” means that “all or virtually all” the product has been made in America. Moreover, all significant parts, processing, and labor that go into the product must be of U.S. origin. Products may not contain any — or only negligible — foreign content.

In applying the “all or virtually all” standard, the FTC will analyze a number of different factors…

In applying the “all or virtually all” standard, the FTC will analyze a number of different factors, including the proportion of the product’s total manufacturing costs attributable to U.S. parts and processing, how far removed any foreign content is from the finished product, and the importance of the foreign content or processing to the overall function of the product.

What if you can’t meet the “Made in USA” standard?

For businesses that can’t satisfy the standard, it is possible to include a qualified “Made in USA” claim, which describes the extent, amount or type of a product’s domestic content or processing and indicates that the product isn’t entirely of domestic origin. Examples include: “70% U.S. content,” or “Made in USA of U.S. and imported parts or assembled in the USA using domestic and foreign parts.”

Be mindful when you claim “Made in USA”

In any event, it is imperative for businesses to thoroughly analyze the percentage of domestic content in a particular product before making a “Made in USA” claim. Under the FTC Act, the FTC is authorized to bring law enforcement actions against false or misleading claims, including those that misstate a product is of U.S. origin.In 2015, the FTC staff sent 28 “closing letters” to businesses that were investigated by the agency and subsequently agreed to alter their labeling and advertising to comply with federal law. To date, the FTC has sent 18 letters in 2016, which suggests the agency’s radar screen is quite active.

If you are unsure whether you can claim “Made in USA” or if you would like to discuss the matter further, contact me, Ron Bienstock, at 201-806-3364.