Does "Made in the USA" Really Matter?

Do you care whether or not the products you buy are made in the USA?

If you ask around, a lot of Americans will say, “Yes, absolutely.” According to a recent Consumer Reports survey, nearly 80% of American consumers say they would prefer to buy products made in the U.S. And more than 60% say they’re even will to pay as much as 10% more for those products.

But what consumers say is very often much different from what they actually do.

Data from the NPD Group’s Checkout Tracking Service say that over 95% of Americans shop at Walmart, which is known for its abundance of Chinese-made products. Estimates suggest that 70% to 80% of products on the shelves of Walmart are imported from China. And most of the rest are imported from other foreign countries.

So even though most people say they would prefer to buy American, they don’t. What’s the deal?

Well, it’s really impossible to know for sure. But I’d say a lot of it does come down to price.

Even though the majority of Americans say they’re willing to pay more for products made in the USA, it seems they’ll still tend to ultimately buy the more affordable option.

As I’m sure you know, it’s simply much cheaper for companies to produce goods overseas. This allows foreign manufacturers and American companies with overseas factories to competitively price their products and still reap a handsome profit. But few really understand just how much cheaper it is to manufacture products overseas.

The average wage for a factory worker in the United States today is a little over $12 an hour. In China, the average pay for factory workers is less than $2 per hour. That’s a 500% difference!

And when you add in the rest of the costs of American factory workers, like health insurance and other benefits, the difference becomes much higher. All in, it costs manufacturers nearly $25 an hour to employ American factory workers.

Of course, it also comes down to what products consumers are buying. Most people wouldn’t buy baby formula made in China, despite a lower price. Or items like children’s toys and paint, due to fears of lead content. But when it comes to products like toilet plungers and doormats, American consumers are going to tend to seek out the most affordable options.

But more than price, I believe it mostly comes down to convenience.

Your time is the most valuable thing you own. Just ask anyone on their deathbed what they’d give for another month of life. Most people don’t want to spend the time figuring out which products are really made in America, which products are only assembled in America, and which products are direct imports from foreign countries.

Sure, there are multiple resources on the internet that direct consumers to American-made products. But more than likely, you’re not going to find all of the American-made products you need and want in the same store. That means spending even more time going from store to store just to buy American goods.

But maybe there’s another reason most Americans say they would prefer to buy products made in the U.S., and why they don’t…

They know it’s impossible to maintain their modern lifestyle and avoid purchasing any foreign-made products.

Fact is, everything you buy — everything around you — is simply an amalgamation of natural resources. The framing of your house is timber. The drywall covering the inside of it is gypsum. The wires running electricity to you are copper.

Even the computer or cell phone you’re using to read this is nothing more than a collection of natural resources: carbon, hydrogen, silica, aluminum, magnesium, silicon, zinc, indium, tin, copper, silver, gold — all of these natural resources and more make up your computer or cell phone.

And while America certainly does have an abundance of natural resources, we simply don’t have it all. There are many important natural resources that are concentrated only in certain countries.

• More than 95% of the world’s platinum and palladium reserves are located in South Africa and Russia. These metals are vital to the manufacturing of automotive catalytic converters.
• The Democratic Republic of Congo and Australia control more than two-thirds of the world’s cobalt resources, which are important to the electric vehicle revolution.
• China produces 97% of the world’s rare earth metals. Without these, you wouldn’t have your modern electronics.
• Morocco controls 75% of the Earth’s phosphate, an important fertilizer.
• Argentina, Bolivia, and Chile contain more than half of the world’s lithium. Most of the rest is in China and Australia.
• Australia and China also control the lion’s share of the world’s lead reserves.

There are more. But the point is, the borders of the United States don’t contain all the natural resources we need to maintain our modern lifestyles.

Then consider everything else that goes into the manufacturing of products…

A jeweler, for instance, might buy gold that was completely sourced in America to make his jewelry. But mining that gold required machinery that probably wasn’t built with materials completely sourced in America. The trucks that transported that gold to the jeweler and the fuel it took to get it there probably weren’t created with materials completely sourced in America, either. You get the point.

So does “buying American” really even matter?

Yes, it does — very much so. Foreign companies and workers don’t pay American taxes, which contribute to everything from schools to national defense. A nation simply can’t survive for very long without any sort of manufacturing base.

But we also need to be realistic. While we have a great wealth of natural resources here in the United States, it would be impossible to maintain and grow the country without fair trade with foreign nations. Fact is, we live in a globalized world and simply cannot be completely independent of foreign trade.

What we can do, however, is try our best to support American companies, even if products cost a bit more. Buying products made in the USA is an investment in America and an investment in her future. I urge you to do what you can to invest in America for today and tomorrow.

Until next time,

Luke Burgess

As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.