Gifts Under the Tree, for Johnny, Suzie, and Chairman Xi

I don’t often take advantage of Black Friday deals, but I needed a set of tires, so I steeled myself for battle, and entered the hunt.

The one thing most shops don’t advertise online is the country of origin (I wonder why), so I handled that part by phone.  I called the shop, identified the deal I was looking for, and asked them to check the country of manufacture (as far as I’m concerned, USA would be nice, but I don’t want tires made in China).  He put me on hold while he looked at the tire, and returned with the news: Singapore!

Great, I said, we’ve got a deal.

So I looked at it when they were done, and it turns out, the tire says “Designed in Singapore.”  But I kept looking. I knew that if the tire said where it was designed, then it would also say where it was made.  Sure enough, I found, in the same small font, a few inches away: “Made in Thailand.”

I got a good deal; I’ll be safe in the snow now—and they’re not made in China.  I’m happy.

But it made me curious.  With the holiday season upon us, and everyone shopping for gifts over the next few weeks, I wonder if everyone knows the sometimes unexpected American rules that govern origin marking on our Christmas presents.

The following are the standard, with aspects enforced principally by either the Bureau of Customs and Border Protection or the Federal Trade Commission.  There are some products that depart from these rules, but these are the basics.

1. Generally speaking, there is no requirement to mark a domestic product with country of origin. This means that if you’re shopping in the USA, and something is unmarked, that should mean it was made in the USA.

2. That being said, if it were made in the USA and the seller wants to say so, then there are some very strict rules about what wording the seller can use:

   1. A product truly made or grown here of 100% domestic materials, or at least 95% domestic materials, can simply say “Made in USA,” “Manufactured in USA,” or Product of USA.”

   2. On the other hand, a product truly made here in the USA, which might have more than 5% foreign content, cannot use those terms unless they are followed with a mandatory qualifier, such as “of foreign and domestic materials.”

So, if you have ever seen a product with a mark like this: “Manufactured in USA of imported and U.S. components” or “Made in USA with global materials,” that means it’s definitely made here; it just has imported parts in it, maybe just a few, maybe a lot.  The only verb that serves as its own qualifier for this purpose is “Assembled.” You’ll therefore see “Assembled in USA” alone, but any other verb needs that additional qualifying language unless the foreign content is less than 5% of the product.

As you might imagine, a lot of companies have difficulty understanding these rules.

The Customs rules governing imports are simpler in some ways, and more difficult in others.

To begin with, Customs defines “origin” as the country in which a product “gained its essential character,” or the country in which the product underwent its “last substantial transformation.”  

Products may go through a host of different processes as they move from raw materials to components to assemblies to a final finished good.  The last “substantial transformation” for a complex manufactured good, such as a hair dryer, might be when an American housing and a Chinese heating element and a Canadian electric switch and a Japanese power cord and a Taiwanese printed circuit board and a Mexican handle are all assembled together to finally become a hair dryer.  Generally speaking, if all these parts came together to become a hair dryer in Mexico, then it’s a Mexican hair dryer. If they came together in the USA, it’s an American hair dryer. If they came together in Germany, it’s a German hair dryer.  In the modern global economy, we must assume that most manufactured products include components from multiple countries.

It does have to be a real transformation, however.  Simple finishing steps like painting, polishing or repackaging don’t change origin.  The question is, “Where did these parts come together to become a hair dryer?”

Once origin is established, this rule kicks in:  All imported products must be marked with their country of origin in a manner clear and permanent enough to convey the origin to an interested consumer, so that it can influence his purchasing decision.

1. Normally either the product or its packaging must bear this marking.  If it’s always sold in a package, then the package must be marked; if it’s always sold unpackaged, then the product itself must be marked, and if it’s sold both packaged and unpackaged, then both must be marked.

2. On the bright side, Customs doesn’t particularly care which verb is used.  So in this respect, it’s easier than the FTC rule for domestic goods.

3. Customs does, however, worry a great deal about mixed messages or confusing statements, such as my experience at the tire shop.  Customs’ rule is that a single origin statement, anywhere on the box or product, is sufficient if nothing else could possibly confuse the matter, but if there is anything misleading, then the origin statement must appear nearby, on the same side, in at least equal font size.

   1. So, if your gift says “Made in Mexico” in 12pt font on the bottom, and has no USA mention anywhere, then that’s probably enough.

   2. But if it says “Designed in USA” on top of the box, and/or it shows the company headquarters address, “Acme Stuff, Inc., Los Angeles, CA” on two sides, then all three of those sides must also bear the “Made in Mexico” statement in at least as large a font, so that nobody who looks only at one side gets the wrong idea.

There are plenty of other rules that accompany these.  Rules governing which countries are declared when a set is sold, and when the origin of small accessories need to be mentioned, and of course what kinds of products are completely exempt from origin-marking. Bureaucracies always find a way to make simple things more complicated than they need to be.

But the big picture is this: If you look hard enough, you should find an origin statement, and as long as you’re careful to watch out for misleading statements, you can make an informed purchasing decision.

Be on the lookout for terms like “Designed in USA” or “Engineered in Germany.” That usually means it was actually assembled somewhere else, and the origin statement will be nearby.  And remember too that in the modern economy, corporate headquarters are often in different countries than the companies’ factories, because some countries have more favorable tax codes for corporations and others have more favorable regulations for manufacturing.

There we go. Now we’re empowered to go shopping, and we know what to look for if we’re interested in where our Christmas gift budget is going.

And we have something else to occupy our minds, as well, while we shop:

Why are so many products made abroad? What could we do to attract more manufacturing to the United States?

Importing from other continents has certain inherent costs, after all—expensive transportation, a long lead time, costly business trips, language barriers, and an incredible upcharge when production errors necessitate rework and reshipment.

Every Christmastime, we should think about these issues, and ask ourselves what public policy changes could be effected, at the federal, state, and local level, to attract more manufacturing back home.

But more importantly, every election time, we should be electing candidates who think about these issues too.

John F. Di Leo is a Chicagoland-based international transportation professional and trade compliance consultant.  A one-time Milwaukee County Republican Party chairman, he has been writing a regular column for Illinois Review since 2009.  Read his book on vote fraud (The Tales of Little Pavel) and his political satires on the current administration (Evening Soup with Basement Joe, Volumes I and II, and the brand new Volume Three).