The first mistake is confusing the customs marking rule with the Made in USA rule. They are different laws run by different agencies, and a product can satisfy one while violating the other. CBP enforces marking under 19 U.S.C. 1304 and 19 CFR Part 134: foreign goods must say where they came from. The FTC enforces domestic origin claims under 16 CFR Part 323, the Made in USA Labeling Rule: a product that claims to be American must be all or virtually all made in the United States.
A product assembled in the US from mostly foreign components might legitimately be marked Made in China under customs rules, because its last substantial transformation happened there, yet the company cannot call it Made in USA just because final assembly happened here. The FTC standard is significantly higher than merely having the last substantial transformation occur in the United States. It requires all significant processing to occur in the US and all or virtually all ingredients and components to be made and sourced domestically.
That gap is where brands get into trouble. The customs mark answers where the product legally comes from. The Made in USA claim answers where it was really made. A label that mixes them up is wrong under one law or the other, and usually both.
The marking must use the English name of the country of origin, and it must be conspicuous, legible, indelible, and permanent enough to survive normal handling until the product reaches the ultimate purchaser. CBP's regulations recommend specific methods by material: metal articles die-stamped, molded, or etched; earthenware and chinaware glazed during firing; paper articles imprinted. Knives, scissors, surgical instruments, pliers, safety razors, and vacuum containers must be marked by die stamping, cast-in-the-mold lettering, etching, engraving, or permanently attached metal plates.
The country is the country where the article was grown, manufactured, or last substantially changed into a new product. When several countries contributed, the rule is the last country where a substantial transformation took place, and CBP evaluates that case by case, looking at whether the assembly or processing was complex and meaningful. A screwdriver turn in a third country does not move the origin. A genuine manufacturing step does.
CBP will not release imported goods from customs custody until they are properly marked, or until the importer deposits the additional duty owed for the marking failure. If the goods are neither corrected, exported, nor destroyed before the entry is liquidated, an additional duty of 10 percent of the customs value kicks in automatically. The penalty for a missing label is a percentage of the shipment, not a fine for the label.
For a product to carry an unqualified Made in USA label, it must be all or virtually all made in the United States. That means final assembly or processing occurs in the US, all significant processing occurs in the US, and all or virtually all ingredients or components are made and sourced in the US. The product must contain no more than a negligible amount of foreign content. The FTC evaluates this by looking at where final assembly occurred, how much of the total manufacturing cost traces to domestic parts and labor, and how far removed any foreign content is from the finished product.
Products with some foreign content that do not meet the all-or-virtually-all bar can use qualified claims: Made in USA with imported parts, or Assembled in USA from foreign components. The Assembled in USA claim requires that the principal assembly took place domestically and was substantial enough to qualify as a last substantial transformation. A qualified claim is honest. An unqualified claim on a product with real foreign content is a civil penalty under the Labeling Rule, which the FTC finalized in August 2021 and which applies to labels, catalogs, and online listings.
The practical rule for a brand is to decide the claim before the label is printed, and to document the cost breakdown that supports it. If the foreign content is more than negligible, qualify the claim. The label is cheap. The enforcement action is not.
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It requires every article of foreign origin imported into the United States to be marked with the English name of its country of origin, in a way that is conspicuous, legible, and permanent enough to survive handling until it reaches the ultimate purchaser. The implementing regulations are in 19 CFR Part 134.
CBP will not release them until they are properly marked or the importer deposits the additional duty. If they are not corrected, exported, or destroyed before the entry is liquidated, an additional duty of 10 percent of the customs value applies automatically.
It means final assembly and all significant processing occur in the United States, and all or virtually all ingredients and components are made and sourced domestically, with no more than a negligible amount of foreign content. It is the FTC standard under 16 CFR Part 323.
Only with a qualified claim, such as Assembled in USA from foreign components, and only if the domestic assembly was substantial enough to be a last substantial transformation. An unqualified Made in USA label on a product with real foreign content violates the FTC Labeling Rule.