For decades, the phrase “Made in the USA” has been emblazoned on everything from pants to automobiles. Despite its presence, however, you might wonder what the benefits of the label are. Perhaps you’re gauging whether getting your business and its products certified as “Made in the USA” is worth the effort.
According to a 2020 survey, 70% of respondents prefer to buy American-made products. Researchers also discovered that 83% of the same group would be willing to pay up to 20% more for domestically-manufactured goods. The “Made in the USA” symbol is synonymous with quality and reliability, which is why most consumers prefer American-made goods.
Below, we explore everything you need to know about the “Made in the USA” label, its meaning, and how to get your business certified.
Where the “Made in the USA” Label Came From
While it is unclear exactly when manufacturers started adding “Made in the USA” tags to their products, we know that the phrase and labeling style has been in use for decades and that it became increasingly common in the 1970s, a time in which the American market became flooded with imported goods.
By 1974, in response to the influx of non-American-made products, unions across the nation began encouraging their member businesses to include “Made in the USA” on their products to differentiate themselves from imported goods. However, importers began to catch on, and several companies started slapping the label onto products made outside of the U.S. to reap the benefits.
Discussions regarding penalties for acts of “Made in the USA” labeling fraud have been ongoing since the establishment of the North American Free Trade Agreement (NAFTA) in 1994, but until recently, both NAFTA and the Federal Trade Commission (FTC) concluded that a “Made in the USA” fraud rule was unnecessary.
However, instances of fraud became so rampant throughout the following decades that the FTC decided to issue a new rule in 2021, under which the commission can seek damages, redress, penalties, and other relief against any entity that lies about the legitimacy of a “Made in the USA” label.
A single violation of the new rule can result in penalties of up to $43,280, which protects consumers and businesses that manufacture or assemble their products domestically.
What Does “Made in the USA” Mean?
The foundation of the new FTC rule is the “all or virtually all” clause, which states that virtually all product components must be made in the United States. Even if its final assembly or processing occurs domestically, a product will not qualify for the“Made in the USA” label if it was manufactured primarily overseas.
If a company faces a fraud claim under the new rule, it must prove that the product was indeed made domestically. The FTC will consider total manufacturing costs and examine what percentage of those expenses can be attributed to overseas processing or parts. The calculation includes manufacturing overhead, direct labor costs, and materials.
The “Buy American” Rule and Its Impact on Brand Labeling Trends
At the start of their presidential term, President Joe Biden and Vice President Kamala Harris spearheaded an effort to promote American-made content in federal purchases. The order, coined “Ensuring the Future is Made in All of America by All of America’s Workers,” established several new rules.
The most notable of the rules is the Buy American Rule, which institutes significant changes to the longstanding Buy American Act. Specifically, the rule supports the domestic production of materials and products critical to economic and national security.
Prior to the change in the Act, products bought with taxpayer funds had to be “substantially all” made in the U.S., but only 55% of the value of those products had to be made in the U.S. to qualify. The new rule increases the threshold to 75%.
The changes also increase transparency in existing rules and provide more insights into whether federal entities comply with domestic purchasing requirements. Additionally, the rule has the potential to strengthen domestic supply chains by setting price preferences.
Why Should You Certify Your Business as “Made in the USA”?
Whether you manage a business-to-consumer (B2C) or business-to-business (B2B) operation, you should consider certifying your brand as “Made in the USA.” Doing so could help your brand accomplish the following:
Strengthen Trust in Your Brand
Domestic consumers vastly prefer American-made goods. By incorporating “Made in the USA” labeling into your products, you effectively make your goods more appealing to your target audience.
Shifting to domestic production processes may lead to increased manufacturing costs, but many consumers are willing to pay more for items that bear the “Made in the USA” label. You may be able to offset any additional expenses by making incremental pricing adjustments.
Increase Overall Sales Volume
Getting your business and its products certified as “Made in the USA” can be an excellent strategy for boosting overall sales volume. Adding the label to your goods makes them more appealing to existing customers, but doing so can also help you attract entirely new consumers.
Once certified to use “Made in the USA” labeling, work closely with your marketing team to determine how best to place it onto your products. While you want to position it in a prominent location, you do not want the label to obscure or distract from your existing branding.
Acquire Government Contracts
The Buy American Rule significantly increases the American-made content threshold of existing domestic purchasing regulations. In response, government entities nationwide will need to purchase a larger percentage of their products domestically.
If you operate in the B2B space and act as a vendor to government entities, obtaining “Made in the USA” labeling will help you maintain your eligibility for government contracts. If you do not currently work with government agencies but have an interest in doing so, you should also consider obtaining “Made in the USA” certifications.
Stand Out from Competitors
Regardless of the vertical you operate within, it can be challenging to differentiate your products from your competitors, but certifying your goods as “Made in the USA” is a great way to stand out.
After you meet the necessary requirements, strategically incorporate the labels into your marketing content and packaging. Your business won’t reap the full benefits of obtaining a “Made in the USA” label if you do not share your efforts with your target audience.
How to Officially Certify Your Company as “Made in the USA”
When certifying your company and products as “Made in the USA,” there are two options. The first involves applying for the Verified Made in the USA Brand Certification Mark, and the second is the Self-Certified Made in the USA Brand Certification Mark.
You must fulfill the accreditation standard, comply with state and federal laws, and adhere to all conditions of the Certification Mark Agreement. Regardless of which option you choose, your business must meet these accreditation standards:
- Your usage of the Certification Mark must conform with FTC regulations
- You must have been operational in the U.S. for at least 12 months
By meeting these specific requirements, your organization can lawfully use the “Made in the USA” label and appeal to consumers passionate about buying American-made goods.