Made(ish) in America

If you’re a manufacturer of American-made goods, you already know the value of the “Made in America” claim has ebbed and flowed over the past few decades. Recently, however, it seems to be making a comeback. Morning Consult’s “Made in America” report shows that nearly two-thirds of U.S. consumers said they routinely sought out “Made in America” products over the past year, driving a rush among many marketing departments to leverage it.

The survey shows that almost 8 in 10 American consumers say they would rather buy an American-made product than an imported one, and many are willing to pay more for it. Interestingly, 43% of consumers prioritize purchasing American-made products over factors such as sustainability or even affordability.

For some consumers, it’s about patriotism, for others it’s a belief in superior American quality. This trend is also being seen in traditionally strong non-domestic categories. According to a recent survey by Cars.com, about 40% of car shoppers in the U.S. say that buying an American-made vehicle is now more important to them—up a whopping 22% year-over-year.

A byproduct of this enhanced focus by consumers is that manufacturers outside of the USA are sometimes purposefully mislabeling products as “Made in America.”

According to Morning Consult’s report, there is confusion on the interpretation and definition of American made. While the majority (60%) believe it means using U.S. parts and labor, 20% believe the definition also allows for foreign-made parts assembled with U.S. labor. So, let’s look at how the Federal Trade Commission actually defines it.

According to the FTC, “Made in America” means that “all or virtually all” the product has been made in America. That is, all significant parts, processing and labor that go into the product must be of domestic origin. “Virtually” comes in when there may be an insignificant component made outside of the USA. (For clarity, the FTC considers both “Made in America” and “Made in USA” to be the same for regulatory purposes.)

However, some manufacturers try to get clever and lead their customers astray by hiding where their products are actually manufactured. Some companies have labeled their products as “Distributed by ABC Corp” and list a U.S. address, seeking to obscure the origin of its products. Some even try to merely include a United States flag image on the box, attempting to imply an unsubstantiated Made in USA claim. Both of these examples would more than likely be subject to FTC regulation.

The FTC is getting more aggressive looking for these misrepresentations, and the fines are getting bigger. In April 2024 Williams-Sonoma was ordered to pay $3.2 million (a record civil penalty for this issue) for violating FTC’s “Made in USA” order. The retailer listed products as being made in the United States when they were actually manufactured abroad.

In contrast, the FTC allows for products to be labeled as “Assembled in America” or “Assembled in USA,” when the components are manufactured in other countries and then brought to the U.S. to be assembled or fabricated. More complex products are often assembled in the U.S. due to access to a more sophisticated workforce, operational technology and advanced resources. While the parts may be sourced from other countries, the assembly process is subject to U.S. quality standards. The result is generally a higher-quality product that consumers feel more confident in. Products sold in other countries typically do not have to meet these same standards, which means they may be made with lower-quality materials.

While the “Assembled in America” label might not carry the same amount of clout as “Made in USA,” it’s still an important distinction for both consumers and our economy.

In the Morning Consult survey, 65% of American consumers said they intentionally always or sometimes purchased “Made in America” products over the past year. Where the data gets more useful is when it’s broken down by gender and age group. Men (67%) cared slightly more than women, and Baby Boomers (at 75%) cared the most. Overall, the older generations like Baby Boomers tend to be more patriotic in their purchasing opinions, with Gen Z being the least concerned with purchasing non-American made products. While only 8% of total respondents said they never bought American-made goods over the last year.

Somewhat surprisingly, the ongoing inflation and increased cost of materials have not deflated the desire for "Made in America" products. The appetite for American-made goods remains high, with American consumers even willing to pay a premium to support U.S. producers, albeit not much of a premium.

Among all adults, 34% said they would pay between 1% and 5% extra, and 39% would go beyond that, spending 6% to 10% extra. But when the premium goes higher than 10% the numbers start to drop off. Just 16% are willing pay 11% to 15% more, and only 7% going beyond 15%.

A product “Made in the America” at a relatively competitive price is often seen by American consumers as the ideal option. The challenge is that depending on the product category, American products can cost on average 5%-10% more to be made in the USA. However, according to a Sacramento State University study, for popular American brands with average price range, “Made in USA” is perceived as 15.3% more expensive than “Made in China,” again leveraging the thought of American-made implying better quality.

It tends to be more challenging for American manufacturers to compete on products that are labor intensive, or where quality isn’t as much of a concern (e.g., one-time-use products). China (and many others) have an advantage as labor wages are vastly different. Minimum wage in China ranges from $1.30-$3.70 per hour compared to America's minimum of $7.25. However, with high-automation and premium products, the U.S. is in a much better position to compete. In fact, according to the Boston Consulting Group, when taking into account both labor intensity and more automated products, the average manufacturing cost in China is on average only 5% lower than in the U.S.

American manufactured goods support over 17 million jobs across the country and contribute over 12% to U.S. GDP. Consumers know that buying products with the “Made in America” label keeps those jobs and our economy thriving. Overall, it appears that domestic goods continue to be more desirable to Americans in the current environment, and trend leaders predict that could last a long time. Your job as a manufacturer and marketer is to figure out how you can leverage it within your category with your customers.

So, wave your flag proudly (on your packaging) and show customers that your products are made for them because you are Made in America.