Qualified Made in USA Claims: Disclosures, Proof, and Penalties

A qualified Made in USA claim is how you legally advertise domestic origin when your product contains foreign parts, materials, or labor. The Federal Trade Commission reserves an unqualified “Made in USA” label for products that meet an “all or virtually all” standard: final assembly in the United States, all significant processing here, and essentially every component of U.S. origin.¹ Anything less requires a qualification that honestly describes what is foreign, placed close enough to the domestic claim that consumers actually see it. Get the qualification wrong and you face FTC civil penalties, competitor lawsuits, and, in some states, additional liability under stricter local rules.

When You Have to Qualify

If your product uses any significant foreign materials, components, or labor, an unqualified “Made in USA” label or advertisement is deceptive under the FTC Act. The agency reads “all or virtually all” literally.² A product assembled in Ohio from a mix of domestic and Chinese parts does not qualify, even if most of the value was added stateside.

The FTC evaluates the overall impression your marketing creates, not just the literal words. If a reasonable consumer would walk away believing the product is entirely domestic, you have a problem regardless of technical accuracy in the fine print. A qualified claim is the lawful alternative: it lets you truthfully describe the American contribution while making the foreign content clear enough that nobody is misled.

The Two Forms a Qualified Claim Can Take

Qualified claims fall into two broad categories recognized by the FTC’s Enforcement Policy Statement: descriptive qualifications and percentage-based claims.¹ Each suits a different manufacturing situation.

Descriptive Qualifications

A descriptive qualification names the foreign content without putting a number on it. “Made in USA with imported parts,” “Made in USA from imported leather,” and “Made in USA from French components” all work when they honestly convey which elements are foreign and how significant they are. Saying a product was “designed in the USA” when every physical component was manufactured overseas technically describes a domestic contribution, but if consumers interpret it as a manufacturing claim, the FTC will treat it as deceptive.

The qualification has to do real work. If you prominently feature “Made in USA” and tuck “with imported parts” into small text elsewhere on the package, the overall impression may still mislead consumers. A phrase like “Made in USA with imported parts” placed in the same font size next to the main claim honestly communicates the hybrid origin. A vague qualifier buried at the bottom of the packaging does not.

Percentage-Based Claims

If you can calculate the domestic share of your manufacturing costs, a percentage claim like “60% U.S. content” gives consumers a concrete number. The FTC expects you to base that figure on the cost of goods sold or finished goods inventory cost, which covers manufacturing materials, direct manufacturing labor, and manufacturing overhead.¹ Marketing, distribution, administrative overhead, and profit margins are not part of the calculation.

The math has to be honest all the way down the supply chain. If you buy a component from a U.S. supplier, you cannot simply assume the component is 100 percent domestic. The FTC expects you to ask that supplier what share of the component’s value originated in the United States.¹ A manufacturer that never questions its suppliers about foreign content and then advertises a domestic percentage is building a claim on a foundation it never verified.

“Assembled in USA” Is Its Own Category

Calling a product “Assembled in USA” is a distinct qualified claim, and the FTC applies a two-part test. First, the product’s principal assembly must happen in the United States, and that assembly must be substantial. Second, the product must have been last substantially transformed here, meaning the assembly created a new article with a different name, character, and use than the components had before.¹

Simple “screwdriver” assembly fails. Snapping together pre-manufactured foreign modules, bolting on a handle, or inserting batteries does not add enough domestic value. The FTC distinguishes between plugging together a pre-made computer from foreign circuit boards and fabricating a complex machine from basic materials. The more the assembly process resembles final packaging rather than genuine manufacturing, the less likely the claim will survive scrutiny. If the primary value and functionality were created abroad, an assembly claim is probably deceptive even if domestic workers spent meaningful time on the product.

Making the Qualification Clear and Conspicuous

There is no magic font size or color that automatically makes a disclosure adequate. The FTC’s standard is functional: did the consumer actually receive the information? If not, the qualification failed regardless of how technically present it was on the page.³

The FTC’s guidance on digital disclosures gives the clearest working picture. Qualifying language should sit as close as possible to the claim it modifies, ideally on the same screen without scrolling. Text should be at least as large as the triggering claim and in a color that contrasts with the background. Burying a disclosure inside a terms-of-use agreement or a long block of unrelated text is treated as functionally invisible. On mobile devices, if the disclosure is too small to read and cannot be enlarged, it fails the conspicuousness test.³

The practical takeaway: your domestic claim and its foreign-content qualifier should look like they belong together. If the “Made in USA” language is in bold 18-point type and the “with imported parts” line is in gray 8-point type three inches away, the FTC will likely view the overall impression as deceptive.

Substantiation You Need Before the Claim Runs

Every qualified claim must rest on a “reasonable basis” of competent and reliable evidence gathered before the claim reaches the public.¹ In practice, that means building a paper trail that traces every component back to its origin. The core records include:

Supplier certifications: written statements from each supplier identifying where their materials and components originate, including the percentage of U.S. content within supplied parts.
Bills of materials that connect each component in the finished product to a supplier and a country of origin.
Manufacturing cost breakdowns showing materials, direct labor, and overhead split between domestic and foreign sources.
Assembly records documenting what work is performed domestically, including labor hours, process descriptions, and the nature of any transformation.

The FTC specifically warns against assuming a U.S.-sourced component is entirely domestic. If you buy a circuit board from a supplier in Texas but that supplier imports the semiconductors from overseas, the foreign content flows through to your product.¹ You are expected to ask, and the absence of that inquiry undercuts any claim of reasonable basis. Keep these records for several years after the marketing ends, since an FTC investigation or a competitor lawsuit can surface long after the advertising ran.

Industry-Specific Rules Sit on Top of the General Standard

If you sell textiles, apparel, passenger vehicles, or fur products, industry statutes impose origin-disclosure requirements that are separate from, and additional to, the FTC’s general framework. The Textile Fiber Products Identification Act requires every textile product to carry a label stating whether it was processed or manufactured in the United States, imported, or both, and mail-order and online listings must state origin in the product description.⁴ New passenger vehicles must display a label showing the percentage of U.S. and Canadian parts content by value, countries contributing at least 15 percent of parts value, the final assembly location, and the countries of origin for engine and transmission.⁵ The Fur Products Labeling Act requires imported fur products to list the country where the animal was raised or trapped.⁶ Meeting the general qualified-claim rules does not excuse you from these industry-specific disclosures.

CBP Marking Is a Separate Question

Customs and Border Protection requires every article of foreign origin entering the United States to be marked with the English name of its country of origin.⁷ That marking rule applies to the physical article at the border. The FTC’s rules apply to how you advertise and label the product’s origin in commerce. Complying with one does not satisfy the other.

CBP uses a substantial-transformation test to decide which country gets marked as the origin. Even if domestic processing transforms imported materials into a fundamentally different product that CBP treats as U.S. in origin, you still need to meet the FTC’s “all or virtually all” standard before making an unqualified “Made in USA” claim in advertising.² A product carrying a “Made in China” CBP marking but sold from a website that says “Made in USA” creates exactly the kind of inconsistency the FTC treats as evidence of deception.

What Goes Wrong When the Qualification Fails

FTC Penalties

The FTC enforces origin claims through two overlapping authorities. The Made in USA Labeling Rule covers product labels and any mail-order or online marketing that stamps, tags, or marks a product as Made in USA, with civil penalties for violations. Deceptive origin claims in broader advertising fall under Section 5 of the FTC Act, which prohibits unfair or deceptive acts in commerce.⁸

Civil penalties are adjusted annually for inflation. As of 2025, the maximum was $53,088 per violation, with each separate instance of a deceptive label or advertisement counting as a distinct offense.⁹ Each day of a continuing violation is treated as a separate offense, so a company that keeps deceptive labels on store shelves accumulates liability daily. Beyond fines, the FTC routinely requires consumer redress payments, prohibitions on future misrepresentations, and mandatory disclosures in future marketing.

The FTC’s April 2026 sweep shows how the pieces come together in practice. TouchTunes Music Company paid $625,000 in consumer redress after labeling its electronic dartboards “Made in the USA” despite containing imported computer chips, cameras, and flatscreen monitors essential to the product’s operation.¹⁰ The company did assemble the dartboards domestically, but because essential components were imported, even an “Assembled in USA” claim would have needed careful qualification. A properly worded qualified claim would have avoided the case entirely.

Competitor Lawsuits Under the Lanham Act

FTC enforcement is not the only risk. A competitor who believes your origin claim is diverting sales from its genuinely domestic product can sue you directly. Section 43(a) of the Lanham Act creates a federal cause of action against anyone who misrepresents the geographic origin of goods in commercial advertising, and any person who believes they are or will be damaged by the false claim can bring suit.¹¹

The financial exposure can exceed FTC penalties. A court may award the competitor its lost profits, your profits from the deceptive sales, and litigation costs. Damages can be increased up to three times the actual amount, and attorney fees are available in exceptional cases.¹² Competitors frequently seek injunctions to stop the advertising immediately, and courts presume irreparable harm more readily when the false claim specifically targets a named rival. A competitor does not need to prove you intended to deceive, only that the claim was false or misleading in a way likely to influence purchasing decisions.

State Consumer Protection Laws

Several states enforce their own domestic-origin labeling statutes, and some set a higher bar than the FTC’s. A product that passes federal muster with a properly qualified claim may still violate a state law that applies a different test. Compliance with FTC rules does not automatically satisfy every state’s consumer protection statute, and reviewing the requirements in states where you sell or advertise is a practical step many businesses skip until after they receive a demand letter.

1
Federal Trade Commission. Enforcement Policy Statement on U.S. Origin Claims
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Federal Trade Commission. Complying with the Made in USA Standard
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Federal Trade Commission. .com Disclosures: How to Make Effective Disclosures in Digital Advertising
4
Office of the Law Revision Counsel. 15 U.S.C. 70b – Misbranded and Falsely Advertised Textile Fiber Products
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eCFR. Automobile Parts Content Labeling
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eCFR. Rules and Regulations Under Fur Products Labeling Act
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Office of the Law Revision Counsel. 19 U.S.C. 1304 – Marking of Imported Articles and Containers
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Office of the Law Revision Counsel. 15 U.S.C. 45 – Unfair Methods of Competition Unlawful; Prevention by Commission
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Federal Trade Commission. FTC Publishes Inflation-Adjusted Civil Penalty Amounts for 2025
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Federal Trade Commission. FTC Announces “Made in the USA” Sweep, Including Three Law Enforcement Actions to Protect American Consumers
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Office of the Law Revision Counsel. 15 U.S.C. 1125 – False Designations of Origin and False Descriptions Forbidden
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Office of the Law Revision Counsel. 15 U.S.C. 1117 – Recovery for Violation of Rights