Domestic manufacturing policy emphasizes U.S. tech, products
Bringing manufacturing back to the U.S. might be a lofty goal for some products, but companies like Apple are making moves to source some components for products locally.
U.S. manufacturing policy continues to lean toward domestic as companies invest locally in technology product components and agencies such as the Federal Trade Commission enforce "Made in USA" labeling standards.
President Donald Trump began implementing tariffs on imported goods earlier this year, with some initially ranging as high as 104%. The swift back-and-forth on tariff policy created uncertainty for tech companies and the larger business community, with an effective deadline of Aug. 1 looming for many of the proposed tariffs.
Tariffs are forcing companies to consider where they source their products, many of which cannot be produced domestically. Items ranging from shirts to mobile phones are often manufactured in countries such as China and India. While companies face the Trump administration's policy toward domestic sourcing and manufacturing for products like semiconductors, federal agencies are also reminding them to meet certain standards when applying the "Made in USA" label to products.
The Federal Trade Commission earlier this month sent a warning letter to four companies reminding them that to comply with its "Made in USA" requirements, products must be "all or virtually all" made in the U.S. The FTC also sent letters to Amazon and Walmart about third-party sellers' deceptive "Made in USA" claims. The FTC finalized its "Made in USA" labeling rule in 2021.
"This could be seen as a continuation of the FTC enforcing the policy," said Rodrigo Balbontin, associate director of trade, intellectual property and digital technology governance at the Information Technology and Innovation Foundation. "On the other hand, it also could be understood as a signal for companies that this is a priority for the administration."
Making products in the U.S.
Roughly 17 million employees were on manufacturing payrolls in the 1990s. That figure dropped sharply to fewer than 12 million from 2000 to 2010 in what Kyle Cattani, a professor at the Indiana University Kelley School of Business, described as the "China effect."
"That's when China started coming online as a worldwide manufacturer," he said. "They came online with significantly lower labor costs, so firms were attracted to those lower labor costs."
Product quality, supply chain and intellectual property concerns are only a handful of the problems that arose as a result of offshoring manufacturing -- challenges that became clear during the COVID-19 pandemic in 2020, which heavily affected supply chains.
Companies that were considering offshoring and now they're having second thoughts, they might have to take into account some of these issues the FTC is raising about how you label your product.
Kyle CattaniProfessor, Indiana University Kelley School of Business
With legislation like the CHIPS and Science Act of 2022 during former President Joe Biden's administration and Trump's continued push to bring back domestic manufacturing, Cattani said he's not surprised to see the FTC warning companies about "Made in USA" labeling.
"Companies that were considering offshoring and now they're having second thoughts, they might have to take into account some of these issues the FTC is raising about how you label your product," he said.
However, it can be challenging for most companies to determine what part of their product is not made in the U.S. Supply chains are often extended globally in a complex fashion, featuring "lots of players across lots of countries," Cattani said.
Also, China has developed manufacturing expertise in many areas, from lithium batteries to electric vehicles to solar panels. China also has a significant hand in the mining and refining of critical minerals needed for products such as semiconductors.
"It doesn't mean you can't move manufacturing to the U.S.," Cattani said. "I think it's just more challenging."
The Trump administration has unveiled several collaborations with American companies to invest and build in the U.S., from AI data centers to semiconductor manufacturing facilities. Apple has even contracted with U.S.-based rare-earth producer MP Materials for rare-earth magnets for its iPhones.
"I can see the actions of the administration pushing the pendulum in the direction they want it to go, but I don't think we can expect everything is going to be made in the U.S. within four years," Cattani said. "That's just not going to happen."
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining Informa TechTarget, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
