Here's what 'Made in USA' actually means
President Donald Trump has pushed the issue to the forefront, proclaiming that his government will have two major economic goals: to buy American and hire American. He has promised to revive and re-shore American manufacturing through creating "fairer" trade deals.
But what does it actually mean to have a manufactured item be designated as "Made in America?"
The standards are stricter than you might think. "Made in USA" is a label protected by the Federal Trade Commission, or FTC. In order for an item to be called such, the item must be made within the United States' borders from "all or virtually all" American parts - that is, with parts also made in the US.
According to the FTC's website, "all or virtually all" means that "all significant parts and processing that go into the product must be of US origin. That is, the product should contain no - or negligible - foreign content."
The protection also applies to anything that implies such a claim. A gray area is anything that purports to be "assembled" or "built" in America, which is technically not the same claim. The FTC has recently forced some companies, like the Detroit-based company Shinola, to clarify their "built in America" claim. Shinola was forced in 2016 to clarify its claim by adding "from imported parts" to descriptions of some of its products, like watches.
It's important to note that this FTC designation is not considered when the US government is the purchaser. The US government is required to purchase only American-made goods if possible, according to the Buy American Act that was signed by President Herbert Hoover in 1933. However, any item assembled in the US with more than 50% American-made parts is considered American-made for this purpose, regardless of the FTC definition.
For automobiles and textiles, as well as items made from fur and wool, additional requirements apply, according to the FTC. Clothing and other textiles are permitted to have a "Made in USA" label as long as the item was cut and sewn in the US and the fabric was created in the US, regardless of where the fiber was originated or where the yarn was spun.
Cars are complicated by additional factors outlined in the 1994 American Automobile Labeling Act. Per the law, in addition to where the car was assembled, automakers are required to list the percentage of equipment in the car that originated in the US or Canada, as well as the country of origin for the transmission. US and Canadian parts are listed together, and anything containing 70% US/Canadian parts or more can be rounded up and called 100% US/Canadian.
This is confusing, so third parties like American University's Kogod School of Business have created indexes to give a clearer picture of the cars that are actually made in America. They measure automakers' contributions to the American economy by taking into account the location of each company's global headquarters, as well as the site of its research and development center.