FTC Made in USA Rule: What "All or Virtually All" Means

A product can carry an unqualified "Made in USA" label only if its final assembly or processing happens in the United States, all significant processing that goes into it happens here, and all or virtually all of its ingredients or components are made and sourced here Source [1]. That is the standard the FTC's Made in USA Labeling Rule writes down, and the agency's staff describe the product as containing no foreign content, or only negligible foreign content Source [2].

This is general information, not legal advice. It is based on the Labeling Rule and on FTC staff guidance, which the staff say is their view of the law and is not binding on the Commission Source [2]. It does not analyze state laws or customs marking.

Writing the origin line of each product post from the brand's own facts is work Autonomah takes on, beginning with a study of what the business offers and what sets it apart Source [3].

What the rule covers

The rule defines the claim broadly. It is any unqualified representation, express or implied, that a product is of U.S. origin, including a statement that it is "made," "manufactured," "built," "produced," "created" or "crafted" in the United States or in America Source [1].

The Policy Statement behind it applies to U.S. origin claims on products and labeling, in advertising and in other promotional material, and to marketing through the internet, email or social media Source [2]. The Labeling Rule itself applies to labels on products and to online or mail order marketing materials that include a seal, mark, tag or stamp labeling a product Made in USA Source [2].

The stakes are not only reputational. A violation of the Labeling Rule is treated as a violation of a rule under section 18 of the FTC Act on unfair or deceptive acts or practices Source [1], and the FTC says marketers are subject to civil penalties for an unqualified Made in USA label on a product that is not all or virtually all made here Source [2].

The three tests, one at a time

The rule lists three conditions, and the label is unfair or deceptive unless all three hold Source [1].

• Final assembly or processing of the product occurs in the United States.
• All significant processing that goes into the product occurs in the United States.
• All or virtually all ingredients or components are made and sourced in the United States.

How the FTC weighs foreign content

Beyond final assembly, the staff look at how much of the total manufacturing cost belongs to U.S. parts and processing, how far removed any foreign content is from the finished product, and how important that content is to the product's form or function Source [2].

Cost is not the whole picture. The guidance gives a watch made in Nevada with inexpensive Swiss movements: the movements are a small share of the cost, but the watch cannot tell time without them, so an unqualified claim is likely deceptive Source [2]. In a second example, a lamp has an imported base that is a small part of the cost, and the claim is still deceptive because the base is not far enough removed from the finished product and is a significant part of it Source [2].

Raw materials depend on the same two questions: how much of the cost they make up and how far from the finished product they sit. Imported gold in a gold ring makes the claim deceptive, while imported petroleum behind the plastic case of a clock radio likely does not Source [2].

When a qualified claim fits

A qualified claim describes the extent, amount or type of U.S. content or processing, such as "Made in USA of U.S. and imported parts" Source [2]. The FTC says to avoid qualified claims unless the product has a significant amount of U.S. content or processing, and that a qualified claim must be truthful and substantiated like any other Source [2].

Wording matters. General terms such as "produced," "created" or "manufactured" in the U.S. are unlikely to convey a message limited to a particular process, so more qualification is needed to describe a product that is not all or virtually all made in the U.S. Source [2]. The guidance calls an ad for a product invented in Seattle and manufactured in Bangladesh as "Created in USA" deceptive Source [2]. By contrast, "Designed in USA, Made in Finland" is its example of a specific processing claim that would not lead a reasonable consumer to believe the whole product was made here Source [2].

"Assembled in USA" has its own bar. The principal assembly must take place in the United States and be substantial, and a simple "screwdriver" assembly of foreign components at the end usually does not qualify Source [2].

Claims you did not mean to make

An origin claim can be implied. The FTC looks at the overall impression, and a U.S. flag, a map outline or a reference to a U.S. factory may convey U.S. origin by itself or with other words and images Source [2]. Its example is an ad in which a manager praises the "true American quality" of the work at an American factory: no express claim, but the net impression is U.S. origin Source [2].

Two limits help. An American brand name or trademark by itself is not ordinarily treated as an origin claim Source [2]. And a whole product line should not be described as made here when only some products meet the standard Source [2].

A check before you post

This routine is ours, and the rule does not prescribe it. The FTC points to the facts to gather, and the steps below put them in order.

1. Collect every phrase and image in the post that says or suggests where the product comes from, including flags, maps and words like "crafted."
2. Ask each supplier for the percentage of U.S. content in what it sells you. The FTC says it would be wise to get specific information rather than assume an input is made entirely in the U.S. Source [2].
3. Check the final assembly and the significant processing steps against the three tests above.
4. If the product does not pass, rewrite the claim as a specific one, such as the process that did happen here, or drop it.
5. Write down what backs the claim and review it again when sourcing changes. The FTC calls this an ongoing obligation: if the company begins sourcing parts overseas, it must update its marketing materials Source [2].

When step 4 ends in a correction, corrections are what Autonomah folds into the proposals that come after Source [3].

How Autonomah does it

Autonomah is an artificial creative and advertising brain that thinks, creates and publishes each brand's advertising Source [3]. Before review, every piece goes through automated checks, among them that what the piece claims is backed up, and what does not pass is redone Source [3]. A product's origin line is a claim like any other, so it falls under that check. In Autonomah's own five-step description, the checks sit inside step four, review Source [3].

Frequently asked questions

Does "manufactured in the USA" mean "made in the USA"?

The rule treats "manufactured" as one of the words that makes an unqualified claim of U.S. origin Source [1]. The FTC staff add that general terms like "manufactured" are unlikely to convey a message limited to one process, so a product that is not all or virtually all made here needs more qualification Source [2].

Does the FTC approve a Made in USA claim in advance?

No. A company does not need approval before making the claim, and the FTC does not pre-approve advertising or labeling claims. A marketer may make any claim as long as it is truthful and substantiated Source [2].

Does the rule replace state law?

Not entirely. The rule says it does not supersede other federal country-of-origin labeling laws, and it leaves state laws in place except to the extent they are inconsistent with it. A state law that gives consumers greater protection is not inconsistent with the rule, as determined by the Commission on its own motion or on the petition of an interested party Source [1].