Defining "manufacturing" and measuring its scope have been challenges from the country's earliest days. If anything, changes in the ways manufactured goods are developed, produced, and sold have made it more difficult to link production to a particular location and to measure the domestic content. The economic value of a manufactured good, and the employment related to the production of that good, may be derived from a wide variety of specific activities in addition to physical transformation. The other is software development. These nonphysical inputs may be produced within the manufacturing firm itself, or may be purchased from other firms. The Tariff Act definition and the regulations implementing it rest on two implicit assumptions:
Each manufactured product is assumed to have a single country of origin. The determination of whether a product is American-made is binary; either it was made in the United States or it is an import. This assumption fits uneasily with the global value chains now widely used by manufacturers to combine components from multiple countries into a single product. Physical transformation is assumed to be the means by which manufacturing creates economic benefits. The fact that other activities related to making a product are conducted in the United States may not be relevant to the determination of whether the product is "Made in U.S.A."—even if, as noted above, those activities account for a large proportion of the value of the finished good. FTC policy states that a product claimed to be made in the United States must be "all or virtually all made in the United States," and should "ordinarily be one in which all significant parts and processing that go into the product are of U.S. origin," and should also be one that was "last 'substantially transformed'" in the United States. Trump Administration Executive Orders

An executive order signed by President Donald Trump on April 18, 2017, applicable to all federal statutes and regulations related to federal procurement and federal grants, directs all agency heads to "develop and propose policies for their agencies to ensure that, to the extent permitted by law, Federal financial assistance awards and Federal procurements maximize the use of materials produced in the United States, including manufactured products; components of manufactured products; and materials such as steel, iron, aluminum, and cement." However, the executive order defines "produced in the United States" only with respect to iron and steel products, for which all manufacturing processes, from melting through the application of coatings, occurred in the United States. Manufacturing in Federal Law

Numerous provisions in federal law create distinctions based on the location at which goods undergo physical transformation. Similar trends in manufacturing employment are in evidence in many other countries. Additionally, to the extent that domestic content requirements such as those described above raise the cost of goods procured under federally funded contracts, they reduce the volume of procurement for any given level of expenditure and thus may adversely affect employment in nonmanufacturing industries such as construction and freight transportation.
Numerous provisions in federal law are intended to support manufacturing in the United States. Almost without exception, these provisions define manufacturing as the process of physically transforming goods. Physical transformation involves what might be thought of as traditional manufacturing activities such as molding, cutting, and assembly. These laws establish a variety of potential benefits, preferences, or penalties based on the country in which physical transformation occurs. On April 18, 2017, President Trump issued an executive order directing federal agencies to ensure that federal grants and procurement maximize the use of manufactured goods produced in the United States, although it defined "produced in the United States" only for iron and steel products.
By and large, federal supports targeted specifically at manufacturing rest on two implicit premises that have been rendered questionable as a result of developments in the private sector.
Each manufactured product is assumed to have a single country of origin. The determination of whether a product is American-made is binary; either it was made in the United States or it is an import. This assumption fits uneasily with the global value chains now widely used by manufacturers to combine raw materials, components, services, and intellectual property from multiple countries into a single, finished manufactured good. Physical transformation is assumed to be the means by which manufacturing creates economic benefits. Under a variety of statutes, the fact that other activities related to making a product are conducted in the United States is not relevant to the determination of whether the product is made in the United States. This is generally the case even if those activities account for a large proportion of the value of the finished good or of the employment related to the good's production. Conversely, a good may be treated as U.S.-made if significant parts are of U.S. origin and if the good was transformed in the United States, even if all research, design, software development, and other nonphysical activities related to its production occurred in other countries.
The physical transformation of manufactured goods increasingly is performed by workers not classified as manufacturing workers. Moreover, it appears that a growing share of workers whose jobs are related to manufacturing are employed in economic sectors not directly involved in physical transformation, including business services, software development, and after-sales service. These changes have made it more difficult to identify workers whose jobs are related to manufacturing. Linkages between nonphysical inputs and factory production may not be evident in government statistics, as the software and services may be produced within the manufacturing firm itself or may be purchased from other firms and may be produced by workers in any number of domestic and foreign locations.
These changes in the structure of manufacturing make it difficult to design government policies that support manufacturing-related value added and employment in the United States. Many federal laws adopted with the goal of supporting manufacturing do not take into account the increasingly blurred lines between manufacturing and other types of economic activity. Additionally, to the extent that domestic content requirements raise the cost of goods procured under federally funded contracts, they reduce the volume of procurement for any given level of expenditure and thus adversely affect employment in nonmanufacturing industries, such as construction and freight transportation.