What Is A Qualified ‘Made In USA’ Claim?

The Federal Trade Commission (FTC) is responsible for preventing deceptive or unfair practices from occurring in the market. The FTC Act empowers the Commission to take legal action against any false or misleading claims that a product is made in the United States. In the past, the Commission has required that any product advertised as “Made in USA” must be “all or virtually all” produced in the U.S. After a thorough review of Made in USA and other U.S. origin claims in product advertising and labeling, the Commission announced in December 1997 that it would continue to use the “all or virtually all” standard.

Therefore, the standard to be considered here is that “all or virtually all” of the item must be produced in the U.S. It is pertinent to note that the policy applies to all products advertised or sold in the U.S., except for those expressly subject to country-of-origin labeling by other laws.

A qualified Made in USA claim describes the extent, amount or type of a product’s domestic content or processing; it indicates that the product isn’t entirely of domestic origin. Example: “60% U.S. content.” “Made in USA of U.S. and imported parts.” “Couch assembled in USA from Italian Leather and Mexican Frame.”¹

• If practical, both the product itself and the packaging or container must carry a foreign origin disclosure. Disclosure on both the product and the packaging has been required for watches, cameras, drills, egg-beaters, electrical tape, sunglasses, and clothing²
• Example 1: A company produces propane barbecue grills at a plant in Nevada. The product’s major components include the gas valve, burner and aluminum housing, each of which is made in the U.S. The grill’s knobs and tubing are imported from Mexico. An unqualified Made in USA claim is not likely to be deceptive because the knobs and tubing make up a negligible portion of the product’s total manufacturing costs and are insignificant parts of the final product.³
• Example 2: Likewise, A table lamp is assembled in the U.S. from American-made brass, an American-made Tiffany-style lampshade, and an imported base. The base accounts for a small percent of the total cost of making the lamp. An unqualified Made in USA claim is deceptive for two reasons: The base is not far enough removed in the manufacturing process from the finished product to be of little consequence and it is a significant part of the final product.⁴

Other Factors Considered

The FTC will consider three factors: “whether the final assembly or processing of the product took place in the United States; the portion of the total manufacturing cost of the product that is attributable to U.S. parts and processing; and how far removed from the finished product any foreign content is.”⁵

Method of Calculation: When analyzing their costs, manufacturers and marketers should consider the cost of goods sold or inventory costs of finished goods. These costs are typically comprised of the total cost of all manufacturing materials, direct manufacturing labor, and manufacturing overhead.⁶

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¹ Complying with the Made In USA Standard (ftc.gov)
² § 11:3. The FTC Act—Method of labeling, Corp Couns Gd to Importing Under U.S. Customs L § 11:2
³ Complying with the Made In USA Standard (ftc.gov) at 5.
⁴ Id at 6
⁵ Paz v. AG Adriano Goldschmeid, Inc., No. 14CV1372 DMS DHB, 2014 WL 5561024, (S.D. Cal. Oct. 27, 2014).
⁶ Id.