MSU study reveals consumer confusion over ‘Made in USA’ labels

Many consumers assume that products labeled “Made in USA” are almost entirely manufactured domestically, but supply chains tell a more complex story.

Take a car, for example. While the engine, transmission and body of the car might be built and assembled in the U.S., the electronics might be manufactured in Japan, the steering system in Mexico, and the raw materials used might be from Canada. Despite this global input, the vehicle can still qualify for a “Made in USA” label under current Federal Trade Commission, or FTC, guidelines if the final assembly is domestic and a substantial portion of the manufacturing costs are incurred in the U.S.

In other words, “Made in America” branding may not fully align with consumer expectations about domestic production.

A new study from advertising and public relations researchers at Michigan State University’s College of Communication Arts and Sciences digs deeper into consumer attitudes, perceptions and behaviors of “Made in USA” claims. Published in the Journal of Law, Business and Ethics, it is only the second peer-reviewed study to explore what “Made in USA” claims mean to consumers.

“Claims that particular brands are made in the United States are often believed by advertisers to be worth promoting,” said Jef I. Richards, professor and lead author of the study. “Laws have been crafted to restrict the use of these advertising/marketing claims. Unfortunately, laws can be formulated without a thorough understanding of consumer perceptions.”

Richards and co-authors — Patricia T. Huddleston, Anastasia Kononova, Juan Mundel, Anna R. McAlister, and Saleem Alhabash — focus on voluntary country of origin claims. Voluntary country of origin claims are statements that companies choose to put on their products or marketing materials to indicate where the product or its components were made, assembled or sourced. Unlike mandatory labeling (such as for some food products or imported goods), these statements are not required by law and are used to influence consumer perception and buying decisions. Voluntary country of origin claims are still subject to FTC regulations and guidelines, despite not being legally required and can be a gray area for regulation: Companies are allowed to advertise claims like “Made in the USA” if “all or virtually all components are made and sourced in the U.S.”

“That ‘virtually all’ language leaves a lot of room for interpretation,” said Huddleston. “It opens the door for companies to make patriotic-sounding claims that may not align with what consumers actually assume those labels should mean.”

For the study, the researchers analyzed survey data from 131 adult respondents, most of whom identified as male, non-Latino Caucasians.

The researchers found:

• Consumers believe “Made in USA” labels actually mean that a product is assembled in the U.S. of entirely U.S.-made parts, even if a few of those parts use raw materials of foreign origin, aligning with the FTC’s criteria.
• Consumers believe a “Made in USA” label should mean that a product is assembled in the U.S. of entirely U.S.-made parts and U.S.-sourced materials.
• Consumers said they were more likely to purchase products with a “Made in USA” label.
• Consumers associated “Made in USA” with quality (31%) and positive emotion (21%). Supporting the economy was another underlying meaning of the label.
• “Made in USA” elicited both positive and negative emotions. Positive emotions included pride and patriotism, whereas negative emotions included racism and false patriotism.
• Participants indicated a greater intention to purchase “Made in USA”–labeled products than products without the label. However, the researchers warn that stated preference and actual purchase behaviors are known to differ.

In addition, approximately one-third of participants expected more from “Made in USA” claims than they felt were delivered, but more than half of them thought the reality exceeded their expectations.

“The one notable conclusion to draw here is that confusion exists,” said Alhabash. “Consumers are not sure what the “Made in USA” label means, nor is their expectation aligning with reality in any consistent fashion.”

The researchers note that protecting consumers from deceptive advertising is laudable, but it’s unknown whether the FTC ramping up its regulatory activity for “Made in USA” claims is a result from greater regulatory oversight or because deceptive claims are on the rise.

As long as advertisers the FTC is targeting are truly engaging in deceptiveness, this increased regulation is a good thing, said Huddleston.

“Where violations are as clear as many appear to be, this certainly seems to be the case,” she said. “But when the FTC is forced to paint close to the line, it is more difficult to be certain that decision falls in the right direction.”

For the sake of those situations, it is vital that more consumer perception studies be conducted, said Richards.

“Consumer perception research is necessary to inform public policy,” he said. “Laws and legal decisions are only as good as the facts on which they are constructed.”