So what exactly does the “Made in the USA” label on products and clothing sold in California really mean? Starting on January 1, 2016, it means that not all of the parts of the merchandise with that label were actually made in the U.S.A.
Prior to 2016, California had the most stringent law governing “Made in the USA” labels on products, which made it unlawful for any entity to sell a product in California with the “Made in the USA” label when the product or any part of the product was made entirely or substantially produced outside of the U.S. In other words, the general rule was that 100% of the product (including all of its components) had to be made in the U.S. in order to market it with the “Made in the USA” label in California. This law generated many class actions in California.
Under amended California Business and Professions Code section 17533.7, California now allows the “Made in the USA” label if one of the following two criteria are met: (1) If all of the foreign-made units or parts in a product is not more than 5% of the final wholesale value of the product; or (2) If all of the foreign-made units or parts in a product – that cannot be obtained from a domestic source – is not more than 10% of the final wholesale value of the product. California Governor Jerry Brown signed this law to stop the tide of class actions filed in California concerning “Made in the USA” claims where tiny components of the end product were foreign-made, and to bring its law closer to the rules set forth by the Federal Trade Commission (“FTC”) .