Coming to a Retailer Near You: Made in USA Labeling Requirements
Patriotism is a hot topic in the United States. One study shows 51% of American consumers will pay higher prices to buy American made products. Not surprisingly, manufacturers actively promote products with the red, white and blue labels proudly proclaiming “Made in USA” to capture those consumers. In fact, some iconic American brands such as Ford, Kraft and GE, are working to get more of their products made in America. There is a lot of pride among American consumers evidenced by spending habits for the products carrying the promise that they were made on home turf. Much was made during the presidential campaign about Donald Trump’s products and whether or not they are manufactured in the US or abroad.
But how do we know the validity of the "Made in USA" promise? Since the 1990s, there have been standards in place for labeling products “Made in USA” to address concerns that manufacturers could overstate the extent to which they meet the requirements. The Federal Trade Commission (FTC), the party responsible for preventing deception and unfairness in the marketplace, states that products must be assembled or ‘substantially transformed’ in the United States and must only contain ‘negligible foreign content’. While the Commission does not pre-approve advertising or labeling claims, it does not mean companies can skirt responsibility. Any consumer can make a complaint to the FTC that a brand is engaging in deceptive advertising practices through mislabeling products. We see increased enforcement activity by the FTC, but with the upcoming transition from the Obama administration to the Trump administration, there are additional enforcement uncertainties.
Ultimately, the question for manufacturers and retailers is: Will the “Made in USA” label mean more than ever over the next four years? Time will tell, but if that is the case, it is important for businesses to understand how to meet the standards for the “Made in USA” label, including how state laws regulate American manufacturing. What to do? For starters, companies should consider ways to keep careful tabs on what goes into their products and consult with legal counsel on how to keep the labels legally compliant.