Recent Trade & Tariff Perspectives

March 30, 2022  |  Anahi Czeszewski  Product Development Manager

What You Need to Know About the Made in USA Label Rule

When purchasing products from stores, online, or elsewhere, we come across a variety of different labels, giving us information about the item’s origin. For some consumers, the origin labeling determines whether they will purchase the item or not. As the Federal Trade Commission (FTC) is tasked with preventing deception and unfairness in the marketplace, read on to learn more about the Made in the USA Labeling Rule—and ensure you understand the requirements for compliance.

Made in USA fraud: A background

Legislation was enacted in 1994, authorizing the FTC to trigger penalties and other remedies for Made in USA fraud, but only after the Commission codified the rule—which never came to fruition. In fact, since the enactment of this legislation, there has been a longstanding bipartisan consensus among Commissioners that fraudulent Made in USA claims should not be penalized.

This quarter-century approach changed on August 13, 2021, when the FTC’s Made in USA (MUSA) Labeling Rule went into effect. Though there are no new requirements on businesses, the MUSA rule codifies the FTC’s longstanding Enforcement Policy Statement on U.S. Origin Claims. The final rule applies only to “unqualified” claims—or claims that do not include statements indicating what percentage or which parts of a product were made in the United States.

A closer look at the Made in USA Labeling Rule

The MUSA rule specifically outlines it is “an unfair or deceptive act or practice” to “label any product as Made in the United States”—whether on physical or digital labels—unless:

• 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 of the product are made and sourced in the United States

The policy covers all products advertised or sold in the United States—except those products subject to country-of-origin labeling by other governing laws. (Examples of additional statutes include the Textile Fiber Products Identification Act and the Wool Products Labeling Act.) It applies where U.S. origin claims appear on products and labeling, advertising, and other promotional materials, whether print or electronic.

Breaking down the MUSA compliance standards

In review of the MUSA rule, outlined below are points in need of a closer look:

• According to the policy, claims can be expressed (i.e., “Made in the USA”) or implied (i.e., a company describes the product’s “true American quality” in an advertisement).
• The FTC is unlikely to interpret the simple listing of a U.S. address located in a non-prominent area as a MUSA claim.
• To be called Made in USA, products must be “all or virtually all” made in the United States, which includes the 50 states, the District of Columbia, and any U.S. territories.
• The concept “all or virtually all” means there is no more than a negligible amount of product of foreign origin.
• To ensure claims are adequately supported, the FTC suggests avoiding general terms including, “produced,” “created,” or “manufactured” in the United States.
• A company does not need approval from the FTC prior to making a Made in USA claim. Ensure your claim is truthful and substantiated.
• A product incorporating foreign components may be called “Assembled in the USA” without qualification when its principal assembly takes place in the United States, and the assembly is sufficiently substantial.

FTC penalty authority

To enforce fraudulent claims, the FTC now has the ability to apply “a broader range of remedies, including the ability to seek redress, damages, penalties, and other relief from those who lie about a Made in USA label.” Penalties for violators of the MUSA rule are currently capped at $10,000 for each violation. Further, instances where repetitive fraudulent claims are made will result in a cease-and-desist order. Notably, each day of noncompliance will be treated as a separate violation.

It is expected this rule will benefit small businesses relying on the Made in USA label, but potentially lack resources to defend themselves from imitators.

How can C.H. Robinson help?

To avoid running the risk of incurring civil penalties or other monetary harm to your company marketers, advertisers, and other relevant individuals within your organization must effectively understand the MUSA rule.

Continue to stay in the know on this and other trade topics by subscribing to our Client Advisories and Trade and Tariff Insights to be notified when new developments emerge. You can also connect with one of our trade policy experts to learn even more.

Resources

• Statement of Commissioner Rohit Chopra Regarding Activating Civil Penalties for Made in USA Fraud - April 17, 2019 (ftc.gov)
• Federal Register: Made in USA Labeling Rule
• Complying with the Made in USA Standard | Federal Trade Commission (ftc.gov)
• USCODE-2020-title15-chap2-subchapI-sec45.pdf (govinfo.gov)
• Enforcement Policy Statement on U.S. Origin Claims | Federal Trade Commission (ftc.gov)