The label “Made in the USA” appeals to many consumers. Quite simply, Americans want to buy products that create or keep jobs in the US. According to a survey conducted by Consumer Reports National Research Center, 78 percent of Americans would rather buy an American product than an identical product made abroad.
That being the case, labeling your product “Made in America” amounts to an advertising claim. To make that claim, you must comply with the strict guidelines laid down in the Federal Trade Commission’s Made in USA policy, which requires products labeled American-made to be “all or virtually all” made in the US. The policy is complex—in fact, it takes more than 40 pages to explain the ins and outs. The term “United States,” by the way, includes the 50 states, the District of Columbia, and US territories & possessions.
Companies don’t need permission to make a claim – but they face penalties for failing to comply with the FTC’s Enforcement Policy Guidelines.
Product advertisements fall into two categories:
- Express advertisements, with labels bearing the legend “USA,” “Made in the USA” or “Our products are American-made.”
- Implied advertisements that use US symbols such as a flag, a map, a reference to a headquarters location in the US – or even an ad that describes the “true American quality” of the product.
Be careful you don’t claim – either expressly or implicitly – that your entire product line is American-made if only some products meet that standard.
Making a Claim
Claims fall into four categories:
- Unqualified claims, which are held to the “all or virtually all” standard. Several factors are considered when it comes to qualifying for this standard. First, the product’s final processing or assembly must take place in the US. Second, the commission considers how much of the product’s total manufacturing costs are incurred in the US. The final requirement is how far removed the foreign content is from a finished product. The FTC notes that consumers tend to be less concerned about foreign content incorporated early in the manufacturing process than content that is a direct part of the finished product.
The FTC explains, for example, ”The steel used to make a single component of a complex product (for example, the steel used in the case of a computer’s floppy drive) is an early input into the computer’s manufacture, and is likely to constitute a very small portion of the final product’s total cost. On the other hand, the steel in a product like a pipe or a wrench is a direct and significant input.” Therefore, whether the steel in a pipe or wrench is imported constitutes a significant factor in whether the finished product is made in the US.Qualified claims, which indicate that a product is , rather than completely, American. For example, a product could say “Made in from imported parts” or “70% US content.”
- Qualified claims, which indicate that a product is partially, rather than completely, American. For example, a product could say “Made in US from imported parts” or “70% US content.”
- Comparative claims, i.e., “Our products use more US content than all other camera manufacturers” or “Our new model uses twice as much US content as the previous model.” These claims have to be substantial. “Twice as much” can’t be an upgrade from 2% to 4%.
- “Assembled in USA” claims are permissible when 1) the principal assembly takes place in the US and 2) the assembly is a substantial part of the process. If all the major components of a computer, including the motherboard and hard drive, are imported, simply putting those components together in what the FTC describes as a “screwdriver operation” doesn’t qualify for the “Assembled in USA” claim.
With those requirements in mind, before you add that “Made in America” label to your product or products, be sure you’re knowledgeable about all the rules governing that appellation. As you read through the FTC guidelines, you’ll notice they contain sometimes tricky nuances between what’s acceptable and what isn’t.
Still, if you can legitimately label your product “Made in America,” it’s clearly to your benefit to do so. Americans are partial to products made and assembled in this country. So a “Made in the USA” designation can give those items a boost in the marketplace.