Supply Chain Shakeup   //   February 5, 2025

The limitations of ‘Made in America’ labels

U.S. President Donald Trump is counting on his new tariffs to prop up products that are “Made in America.” In the U.S., the term is linked with patriotism and pride, serving as a counter to “Made in China” and other offshore manufacturing. In reality, though, many products that say they are “Made in America” aren’t fully made in the U.S. in the way consumers might expect.

Shoppers today have likely seen the words “Made in U.S.A.” included on clothing tags or stamped on the underside of home goods. The marker is officially overseen by the Federal Trade Commission, a government agency that enforces consumer protection and antitrust laws. According to the FTC, the label “Made in U.S.A” applies to products that are “all or virtually all” made in America. “Significant parts, processing and labor that go into the product must be of U.S. origin,” the policy reads. (These rules also apply to anything labeled as “American-made” or “Made in America.”)

According to the FTC, marketers are subject to civil penalties if they use an unqualified “Made in U.S.A.” label on a product. But finding (and fining) rule breakers can be difficult because vetting is not baked into the process from the get-go. Per the FTC, “a company doesn’t need approval from the FTC before making a ‘made in U.S.A.’ claim and the FTC doesn’t pre-approve advertising or labeling claims.” The FTC also says that “as with most other advertising claims, a manufacturer or marketer may make any claim as long as it’s truthful and substantiated.”

Federal rules require products in two sectors — automobiles and textiles/wool/fur — to specify whether they contain materials from the U.S. Other sectors are not required to do so. Ideally, all brands would tell the truth about to what degree their products are actually “made in America.” But without the FTC inspecting each new good every day, enforcement of these rules largely relies on the honors system.

Under FTC rules, a good cannot be labeled as “Made in U.S.A.” if its final assembly or processing does not take place in the U.S. Also up for consideration is how much of the product’s total manufacturing costs come from U.S. parts, how far removed foreign materials are from the finished product and whether foreign materials are integral to the product’s form or function.

The FTC lists a few examples of decision-making around this. A watch that is assembled in the U.S. but uses movements from Switzerland could not say it is “Made in U.S.A.” because the Swiss movements are critical to the final product. However, a plastic clock radio that primarily uses U.S. components — except for imported petroleum used to make the plastic case — could say it is “Made in U.S.A.” because the petroleum is “far enough removed from the finished product,” per the FTC.

Transparency into the supply chain is thus critical when determining whether something is American-made. But not all brands may take the time or care to track each step, said Jeanne Carver, the founder of Shaniko Wool Company, a consortium of ranchers in the U.S. West. Shaniko Wool Company sells wool to apparel businesses, many of them small or designer ones.

“Even if [businesses] know where the fabrics came from, they may not know who made the yarns to make the fabrics, and they certainly may not know where the fiber [to make the yarn] came from,” Carver said.

In Carver’s ideal world, a brand that claims they are “made in America” would also use domestic fabrics. However, in reality, there are very few apparel goods on the market that are American-made from top to bottom, in large part because the U.S. doesn’t have the infrastructure to do so on a grand scale. For instance, an outerwear brand might use cotton that’s farmed in the U.S. but then import zippers or snaps from abroad.

Most of the time, ‘made in America’ does not mean fully American,” Carver said. “It’s made with imported pieces. We call them components. It’s really a challenge to find a completely traceable, fully authentic U.S. product … that came from the land.”

The FTC says that “if given in good faith,” manufacturers and marketers can rely on information that suppliers give them about domestic content to decide how to label their products. However, the FTC says that “rather than assume the input is 100 percent U.S.-made … manufacturers and marketers would be wise to ask the supplier for specific information about the percentage of U.S. content before they make a U.S. origin claim.”

Wyatt Outdoors, a women’s performance apparel brand whose products recently appeared on “Yellowstone,” is being careful to label products accordingly, founder Colleen Tuohy told Modern Retail. Wyatt Outdoors’ products are cut and sewn in the U.S. and use wool from the U.S. and Australia. The tag of the Daily, Wyatt Outdoors’ signature henley, says it is “made in America of Australian wool.” Next year, another shirt, the Carter, will transition to using American fibers and fabric, and its label will be updated, Tuohy said.

If products aren’t completely made in America — but are constructed in an American factory — their labels should reflect that, said Sam Vise, co-founder and CEO of Optimum Retailing. Given how many products today fall under this umbrella, “I believe a more accurate term might be ‘assembled in America,'” Vise told Modern Retail. The FTC also recommends this phrasing for certain products, giving the example of a “couch assembled in U.S.A. from Italian leather and [a] Mexican frame.”

Saying that something is assembled in America “reflects the global supply chain and the contributions of trading partners that often purchase as much from the U.S. as the U.S. purchases from them,” Vise said. “So while ‘Made in America’ remains a somewhat ambiguous term, adopting ‘assembled in America’ could provide a clearer and more realistic perspective on the evolving dynamics of U.S. manufacturing.”