- Advertising that your products are made in the United States can give you a competitive edge and selling point
- However, a class action suit against the sneaker company New Balance offers a warning about labeling requirements
- Federal Trade Commission regulations say products should only be labeled “Made in USA” if they are completely manufactured in the U.S., or only have a negligible amount of foreign input
Summary by Dirk Langeveld
Companies that rely on domestic suppliers to make their products have long known that patriotism sells. Saying that your product is made in the United States lets consumers know that you are supporting American businesses; consumers, in turn, are willing to pay a premium to lend their own support as well.
However, a class action suit against the sneaker company New Balance highlights why businesses should be cautious with “Made in USA” labeling. The suit charges New Balance with misleadingly branding itself as making its products in the United States, only noting in the fine print that domestic production is limited to about 70 percent.
Under regulations by the Federal Trade Commission, “Made in USA” labeling should only be used if a product is completely manufactured in the United States, though the labeling is also allowed if foreign sources account for a negligible amount of input.
- While the FTC has primarily enforced the rule against larger companies, businesses that use “Made in USA” labeling without meeting regulations could find themselves subject to fraud lawsuits and a loss of reputation
- The issue can be challenging as some companies make a commitment to American manufacturing but have to rely on foreign sources for some materials
- Some companies have been considering onshoring or near-shoring strategies to avoid supply chain disruptions in the future
