Fulfilling a major campaign promise, President Joe Biden signed a Made in America executive order Monday, Jan. 25, 2021, designed to increase the amount of federal spending on products made by American companies.
A statement, released by the White House prior to the signing said, “With this order, President Biden is ensuring that when the federal government spends taxpayer dollars they are spent on American-made goods by American workers and with American-made component parts.”
- President Joe Biden’s executive order requiring government agencies to “buy American” is designed to promote and help American companies and workers.
- The definition of Made in America, under the Federal Trade Commission, is subject to interpretation, which could make the President’s executive order difficult to enforce.
- “Unqualified Made in America” means produced or assembled in the United States with all or nearly all domestic materials.
- A looser interpretation called “qualified Made in America” allows the inclusion of more foreign materials.
- Any product whose country of origin is not the United States cannot be classified as Made in America, no matter where the materials came from.
- Policing and enforcement of Made in America laws falls to the FTC in response to complaints from the public.
A ‘Buy American’ Executive Order
President Biden’s executive order titled “Ensuring the Future Is Made in All of America by All of America’s Workers,” imposes rules designed to force government agencies to increase purchasing of products made in the U.S. instead of overseas. It’s a move toward fulfilling Biden’s Buy American campaign pledge, which he hopes will strengthen domestic manufacturing.
The premise of the order, stated in section 1, is simple: “The United States Government should, whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.”
To achieve this the order includes directives to:
- Establish a Made in America Office with a director appointed by the Director of the Office of Management and Budget (OMB).
- Tighten government rules and practices, including the waiver process, to make it harder for federal agencies to purchase imported products.
- Promote strict enforcement of the Buy American Act of 1933.
- Ensure that small and medium sized businesses will have better access to information needed to bid for government contracts.
- Promote an accountable and transparent procurement policy.
What Is ‘Made in America’?
The Federal Trade Commission (FTC), charged with preventing deception and ensuring fairness in the American marketplace, is responsible for defining “Made in America” or “Made in the USA” and enforcing that standard when it comes to products that claim U.S. origin. Guidelines and rules are laid out in a 40-page FTC publication titled Complying With the Made in the USA Standard.
There are two types of Made in America claims, unqualified and qualified. Unqualified refers to a claim that the product is “all or virtually all” made in the U.S. A qualified claim acknowledges that the product is U.S. made, but not entirely of domestic origin.
Unqualified ‘Made in America’ Claims
An unqualified claim means the manufacturer is purporting that the product is “all or virtually all Made In USA,” meaning the 50 states, the District of Columbia, and all U.S. territories or possessions. Nailing down a precise meaning for ‘all or virtually all’ is where things get tricky.
The FTC further defines the standard to say:
- All significant parts and processing that go into the product must be of U.S. origin.
- There should be no or negligible foreign content.
- The manufacturer needs “competent” and “reliable” evidence to back up the claim.
- Final assembly or processing must take place in the U.S.
Other factors the FTC takes into consideration include:
- How much of the product’s total manufacturing costs, including cost of goods sold or inventory costs of finished products, involve U.S. parts and processing
- How far removed any foreign content is from the finished product
Qualified ‘Made in America’ Claims
A qualified “Made In America” claim must include an additional descriptive element or elements that make it clear the product is not entirely Made In America using only American made components.
The qualified standard can include the phrase “Made In America,” “Made In USA,” or “Assembled in the USA,” as long as a distinction is made between this product and one that is “all or virtually all” made in the United States. For example:
- Made in the USA of U.S. and Imported parts.
- Assembled in the USA from materials imported from Mexico.
- Made in the USA with 60% U.S. content.
As with an unqualified claim of origin, a qualified claim must be truthful. The ultimate deciding factor is whether the claim is deceptive.
If a product’s country of origin is other than the United States, that product cannot be promoted or advertised as ‘Made in America.’
‘Country of Origin’ Legislation
Any attempt to label certain products “Made in USA” may be impacted by laws that apply to those products. These laws, known as Country of Origin laws, impose another check on manufacturers or retailers who may try to circumvent the rules. If the country of origin is other than the United States, the product cannot, by definition, be made in America.
Tariff Act of 1930, Section 304 requires that “unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked with its country of origin.”
Textile Fiber Products Identification Act requires a “Made in USA” label on clothing manufactured in the U.S. with fabric made in the U.S. even if the the materials used to create the fabric are of foreign origin.
Wool Products Labeling Act requires wool products to be accurately labeled with fiber content and country of origin.
Fur Products Labeling Act requires manufacturers and retailers to label fur products with the name of the animal, manufacturer’s name, and country of origin.
American Automobile Labeling Act requires that every automobile manufactured on or after Oct. 1, 1994, and sold in the U.S. be labeled to disclose:
- The percentage of U.S./Canadian equipment (parts);
- The names of any countries other than the U.S. and Canada that individually contribute 15% or more of equipment content, and the percent of content for each such country (maximum of two countries);
- The final assembly point by city and state (where appropriate), and country;
- The country of origin of the engine and transmission; and
- A statement explaining that parts content does not include final assembly (except the engine and transmission), distribution, or other non-parts costs.
Buy American Act of 1933 requires that a product be manufactured in the U.S. and contain more than 50% U.S. parts to be considered “Made in USA“ for government procurement purposes.
How to Spot a Fake
Rooting out fakes is not easy, given the somewhat vague FTC labeling requirements. Here are some things to look for that might tip you off:
Country of Origin is required to be posted conspicuously on any product that originates outside the United States. If the country of origin is not the United States, the product is not made in the USA.
Flag stickers are commonly used to distract consumers. A flag sticker or large USA label is not an indication the product is American made.
Spelling or grammar mistakes on the labels are indicative of foreign manufacture. They might be missed by non-English speaking workers.
Made in America is not as convincing as Made in the USA. Technically, Made in America could include Canada or Mexico.
Check the websites of companies or products you’re not sure about. There may be information in the About Us section that explains where products are actually made.
Barcodes are not a helpful indicator. Viral messages and posts saying you can tell the country of origin by the barcode are misleading at best. Barcodes do not necessarily indicate the country of origin of the product but rather the country of origin of the barcode.
Internet messages and emails suggesting you can tell a product’s country of origin from its barcode are misleading. Barcodes only tell you where the barcode came from—not the product.
What to Do If You Suspect a Fake
If you come across a product claiming to be Made in America or Made in the USA and you suspect the claim is bogus, contact the Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, DC 20580; (202) 326-2996 or send an e-mail to [email protected]
If you have specific information about import or export fraud, call Customs’ toll-free Commercial Fraud Hotline, 1-800-ITS-FAKE. This could include knowledge about someone removing a required country of origin label before the product is delivered.
You also can contact your state Attorney General and your local Better Business Bureau to report a company. Or you can refer your complaint to the National Advertising Division (NAD) of the Council of Better Business Bureaus by calling (212) 754-1320.