Made in USA Requirements

"Made in USA" is not a single legal standard. Two separate regimes govern the claim: one for commercial labeling enforced by the Federal Trade Commission, and one for federal procurement governed by the Federal Acquisition Regulation. Contractors who sell the same product in both markets must satisfy both frameworks independently, and compliance with one does not guarantee compliance with the other.

What is Made in USA Requirements?

The FTC administers the commercial standard under 16 CFR Part 323. The FTC "all or virtually all" test requires that substantially all significant parts, processing, and labor originate in the United States. The FTC does not set a fixed percentage threshold; it instead evaluates the proportion of domestic versus foreign content, the importance of foreign inputs to the final product, and the extent of domestic processing. Violations can result in FTC enforcement actions and civil penalties.

In federal procurement, the relevant standard is the Buy American Act (41 U.S.C. 8301-8305) as implemented in FAR Part 25. Under FAR 25.003, a "domestic end product" is a manufactured item whose components meet a 55 percent domestic cost threshold (as of the current FAR thresholds; the percentage has increased over time and continues to rise under executive guidance). DoD contracts add an additional layer through the Berry Amendment (10 U.S.C. 4862), which requires 100 percent domestic sourcing for specialty metals, food, clothing, and certain textile and hand or measuring tool items with no percentage exception.

False "Made in USA" representations in federal procurement are not merely a labeling problem. They constitute potential violations of the False Claims Act (31 U.S.C. 3729), which carries treble damages and civil penalties per false claim submitted.

Why it matters for contractors

A contractor that markets a product as "Made in USA" for commercial channels cannot assume that same product qualifies as a domestic end product under FAR 25. The two tests use different methodologies, different definitions, and different cost accounting approaches. A product that passes the FTC's qualitative "all or virtually all" review may still fail the FAR 25 component cost calculation if foreign components, measured by acquisition cost, exceed 45 percent of total component cost.

Contractors must track component-level cost data by country of origin and document that data in a form retrievable for audit. They must also monitor Berry Amendment categories on DoD contracts and verify that specialty metal supply chains trace entirely to domestic mills regardless of how many tiers removed the metal is from the prime contractor.

Example

A furniture manufacturer markets its office chairs as "Made in USA" under the FTC standard because 95 percent of components by value and all final assembly are domestic, satisfying the "all or virtually all" test. When the same manufacturer bids on a General Services Administration contract for office furniture, it must separately certify the chairs as domestic end products under FAR 25.003. If the chairs meet the 55 percent domestic component cost threshold, both certifications hold. If a foreign seat cushion foam supplier represents more than 45 percent of component cost, the chairs fail the FAR test even though they pass the FTC commercial standard, and the contractor must either re-source or disclose non-domestic status and accept the price evaluation penalty.