"Made in USA" vs. "Assembled in USA" Claims: What You Need to Know
Mary Engle, Executive Vice President, Policy, BBB National Programs
In today's marketplace, the claims "Made in USA" and "Assembled in USA" often appear on product labeling and advertising, but do you know the important difference between them? While both suggest a connection to American production, the standards governing their use are remarkably distinct, with significant implications for both businesses and consumers.
Understanding the nuance is key to making informed purchasing decisions and avoiding misleading advertising.
The "all or virtually all" standard requires three things:
This standard was developed by the FTC in the mid-1990s based on consumer research, which revealed that consumers understand "Made in USA" to mean that a product was processed, built, and assembled here with American components, allowing only for "de minimis, negligible foreign components." The FTC in 2021 issued a rule on Made in USA labeling, aligning its advertising policy with labeling requirements and allowing for civil penalties for violations.
However, an “Assembled in USA” claim comes with its own set of rules to prevent deception:
The presence of even inexpensive foreign parts critical to a product's function, such as a watch movement, can prevent an unqualified claim.
Increased scrutiny from the FTC, BBB National Programs' National Advertising Division (NAD), competitors, and class-action lawsuits highlight the importance of these distinctions. Ultimately, accuracy and transparency are paramount for consumers and businesses, building trust and fostering a fair marketplace.
In today's marketplace, the claims "Made in USA" and "Assembled in USA" often appear on product labeling and advertising, but do you know the important difference between them? While both suggest a connection to American production, the standards governing their use are remarkably distinct, with significant implications for both businesses and consumers.
Understanding the nuance is key to making informed purchasing decisions and avoiding misleading advertising.
The Gold Standard: "Made in USA"
For a product to truthfully claim to be "Made in USA," it must meet a strict standard set by the Federal Trade Commission (FTC): "all or virtually all" of the product must be sourced, manufactured, and assembled in the United States. This isn't just a simple guideline; it's a high bar designed to ensure that consumers' understanding of what "Made in USA" means is met.The "all or virtually all" standard requires three things:
- Components and Ingredients: All or virtually all of the product's ingredients or components must originate from the U.S., meaning there should be no, or only negligible, foreign content.
- Significant Processing: All significant processing involved in making the product must occur domestically.
- Final Assembly or Processing: The final stages of the product's creation must take place in the U.S.
This standard was developed by the FTC in the mid-1990s based on consumer research, which revealed that consumers understand "Made in USA" to mean that a product was processed, built, and assembled here with American components, allowing only for "de minimis, negligible foreign components." The FTC in 2021 issued a rule on Made in USA labeling, aligning its advertising policy with labeling requirements and allowing for civil penalties for violations.
The Nuance: "Assembled in USA"
In contrast to “Made in USA,” the claim “Assembled in USA” signifies a different level of domestic content and processing. The FTC has explicitly stated that “Assembled in USA" and “Made in USA” are not interchangeable terms. A product is not “Made in USA” if the only thing that happens is assembly in the United States. Conversely, a product can truthfully claim to be “Assembled in USA” if its final substantial assembly takes place in the U.S. even if not all component parts are of U.S. origin.However, an “Assembled in USA” claim comes with its own set of rules to prevent deception:
- Principal Assembly: The product's principal assembly must take place in the U.S.
- Substantial Transformation: The “assembly” that takes place in the U.S. must involve a substantial transformation of the product. This means that merely putting a few parts together will not qualify for an Assembled in the U.S. claim. For instance, simply using a screwdriver in the U.S. to assemble foreign components would not be a sufficient transformation. Remember the “screwdriver caveat” before claiming that something is “Assembled in USA.”
Why These Distinctions Matter
Saying something is “Made in USA" is a powerful claim that offers businesses product differentiation and attracts patriotic consumers. This claim may be especially relevant with potential tariffs on foreign-made goods. This benefit, however, demands significant accuracy and transparency. The FTC's strict "all or virtually all" standard requires nearly all sourcing, manufacturing, processing, and final assembly to be domestic with negligible foreign content.The presence of even inexpensive foreign parts critical to a product's function, such as a watch movement, can prevent an unqualified claim.
Increased scrutiny from the FTC, BBB National Programs' National Advertising Division (NAD), competitors, and class-action lawsuits highlight the importance of these distinctions. Ultimately, accuracy and transparency are paramount for consumers and businesses, building trust and fostering a fair marketplace.