Recent trends indicate that consumers and the U.S. government are paying more attention to where products are sourced from.
The Biden administration, for example, has made efforts to raise federal procurement standards for products “Made in America.” Specifically, the administration in March announced a final rule that outlined gradual increases to the “Made in America” requirement. As of October 25, the rule requires that federally procured products under the Buy American Act must have 60% of the value of their component parts manufactured in the United States. Under the prior rules, the Buy American Act only required that products contain 55% component parts manufactured in America in order to qualify for federal procurement. The threshold will further increase to 65% in 2024 and 75% in 2029.
As an initial signal of the importance of this rule to the administration, during his first week of his presidency, President Biden signed Executive Order 14005, Ensuring the Future Is Made in All of America by All of America’s Workers, which established a Made in America Office in the Office of Management and Budget (OMB) that is dedicated solely to investing in American workers, manufacturers, and goods. The office will now be in charge of implementing the federal procurement requirements.
Importantly, this final rule regarding “Made in America” claims for federally procured products is separate and distinct from FTC’s “Made in USA” Labeling Rule that took effect on August 13, 2021. Although these two actions sound incredibly similar, they serve different purposes. Under FTC’s “Made in USA” Labeling Rule, a product using a U.S. origin claim is prohibited unless 1) final assembly or processing of the product occurs in the United States; 2) all significant processing that goes into the product occurs in the United States; and 3) all or virtually all ingredients or components of the products are made and sourced in the United States.
The FTC also now has the authorization and enforcement power to seek civil penalties of up to $46,517 per violation of this rule. For more information about FTC’s recent enforcement, please check out this blog post written by Venable’s Advertising Law Group.
Any way you slice it, the current administration is sending clear signals that product manufacturing origin claims are a priority with respect to consumers and federal purchasing. To be sure, it is also now crucial that labeling claims remain accurate and compliant, given the dual threat of private litigation and hefty penalties from the FTC. Indeed, there have already been five actions brought by the FTC against companies that misused the “Made in USA” origin claim.