Made in America?

My husband is a small business owner and producer of sauces and fermented foods, primarily to sell at our local farmer’s market. While he attempts to create healthy products using the best ingredients, the reality is that he would be out of business if he only used organic or local farm ingredients. This is not to say that he hasn’t in the past or will not get creative when offered an opportunity (a deal on a crate of damaged peaches or hyper-seasonal ingredients like ramps). But he generally makes a weekly run to Restaurant Depot, where the produce is likely to come from different countries. While he doesn’t have a Made in U.S.A. claim on his products, I wonder whether they would even qualify?

What got me thinking about this concept was a recent client question about the new tax deduction on automobile loans associated with the purchase of American-made cars within the One Big Beautiful Bill (OBBB). Specifically, how do you determine whether a car (or anything else for that matter) is American made?

The Made in U.S.A. claim is basically a marketing slogan that the Federal Trade Commission (FTC) enforces. The U.S. Customs Service regulates foreign-origin markings under the Tariff Act of 1930. It is through this Act that Customs determines country of origin based on substantial transformation tests that are made on a case-by-case basis. Any product that is cleared of foreign origin does not necessarily need to indicate country of origin, but it is not automatically considered made in America. I don’t know about you, but the whole thing seems a little, “subject to interpretation.” In addition, guidance on the Made in U.S.A. policy enforcement dates to 1997, so I’m wondering if it is due for a refresh.

According to the FTC policy, “a product that is all or virtually all made in the United States will ordinarily be one in which all significant parts and processing that go into the product are of U.S. origin.” In interpreting this guidance a few factors are considered including:

• Whether final assembly occurs in the U.S.
• How much of the total manufacturing cost is attributed to U.S. parts and processing.
• How far removed from the finished product foreign content is.

And now for a little history lesson. In an article from the National Museum of American History (NMAH), the Chair and Curator of the Division of Work and Industry notes that purchasing foreign goods has been a thing since the very beginning of our country. In fact, he notes that, “Trade as well as manufacturing location is historically important to the development of the nation.” You can look at any one manufactured good and break down its component parts by source country and where each part is applied to the final product with any number of countries in the mix. He further points out that the loss of manufacturing work does not necessarily dampen American companies’ profits when they participate in the design and marketing of those products.

Back to the OBBB car loan interest deduction, which applies to interest up to $10,000 on qualifying car loans for automobiles purchased in 2025 through 2028. Regarding what qualifies as an American made car depends on whether the car has undergone final assembly in the U.S. To determine this, you need the car’s Vehicle Information Number (VIN) or information label from the dealer.

I asked my husband how much of his sauce is made from U.S. ingredients and his best guess was 50%. But he does substantially transform the ingredients in his Falls Church shop, which should count for something.

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