How much more will Americans pay for a product made in the United States? According to a new survey, the answer is about 5%.
On this episode of the Rio Grande Valley Business Journal’s podcast, reporter Kristen Mosbrucker-Garza speaks with Jason Miller, a professor at Michigan State University, about consumer survey research sponsored by the Michigan Economic Development Corp.
Miller said most respondents want to buy U.S.-manufactured goods and will pay a modest premium for them. Beyond about 5%, consumers start to “watch my wallet” and choose the lower-cost alternative.
Younger Americans showed the most interest in buying American, Miller said, but they also expect fast delivery after growing up in “the Amazon era.” That means companies weighing domestic production must get distribution right, not just price.
The conversation also covers:
• Why “assembled in America” is the norm in an era of global supply chains
• Miller’s rule of thumb that one in every $6 of U.S. manufactured exports comes from foreign-sourced inputs
• Why a fully made-in-America vehicle doesn’t exist
• Supply chain advice for small businesses and first-time owners in the Rio Grande Valley
• Why tariffs not set by legislation have struggled to spur domestic production
• The AI computing build-out and why Texas is among its biggest beneficiaries
Check out the podcast below, or on your favorite podcast provider.
The following is a rough, AI-generated transcript of Kristen Mosbrucker-Garza’s interview with Jason Miller, the Eli Broad Professor in Supply Chain Management at Michigan State University. Minor errors and misspellings may appear. For the full conversation, listen to the episode above or through your preferred podcast platform.
Kristen Mosbrucker-Garza: On this episode of the Rio Grande Valley Business Journal podcast. I speak with Jason Miller. He’s a professor at Michigan State University, and we’re discussing something really interesting: this concept of Made in America. And there’s new research on how Americans feel about how much they might pay for something made in America, and how that affects the Rio Grande Valley, which tends to be a place where a lot of companies end up either reshoring or nearshoring.
Jason Miller: This is something that was sponsored by the Michigan Economic Development Corporation. It was a, you know, random sample of U.S. consumers in terms of sample size.
Kristen Mosbrucker-Garza: And so, it sounds like, you know, this is really from folks in industry because they probably wanted to get some consumer sentiment. I noticed that Michigan conducts a lot of consumer sentiment surveys. You know, what inspired that? And, you know, what are some things that y’all learned?
Jason Miller: Yeah. So this survey in particular is really, you know, designed just to get a sense for, I’d say, the tolerance for the U.S. consumer to be willing to pay more for a U.S. variant of a product compared to, let’s say, you know, something sourced globally. And so the, you know, real kind of takeaways from this are, you know, the majority of Americans said, look, we’re interested in buying U.S.-manufactured products, U.S.-manufactured goods.
We’re willing to pay a little bit more. And that’s, I think, the key emphasis: We’re willing to pay a little bit more than for a globally sourced alternative, but it’s not that much — you know, call it 5% more. There is a decent toleration, but you start getting beyond that, you start seeing consumers say, no, I’m going to, you know, watch my wallet. I’m going to go for the lower-cost alternative, all things equal.
But then what we also found is some generational differences. Probably the most significant one was that younger Americans actually expressed more interest and more willingness to essentially pay more for a U.S. version of a product or a U.S. source. But they’re also very demanding in terms of product availability and sort of waiting-time expectations.
And that makes sense, because a lot of younger consumers have really grown up in, let’s call it, the Amazon era, where you can, you know, expect product to be delivered, you know, next day or two days from now. And so that poses, you know, I think, one of the challenges for U.S. firms that are thinking, OK, maybe we have been sourcing this product globally. Is there room for more domestic production?
Well, even if there is, you have consumers with relatively little tolerance for higher prices than, you know, a variant sourced from overseas. But also you have to make sure that the distribution channel to get that to the consumer is going to function well, because even if you can manufacture it and sell it for 2% higher cost than what an international version is, if it’s going to be a week lead time, the consumer — you know, especially your younger buyers — are going to be less tolerant.
Kristen Mosbrucker-Garza: You know, I remember a couple of years ago when Walmart — they’re one of the largest U.S. retailers, based there in Arkansas — really heard from a lot of their customers: Hey, like, we love you, Walmart, but we are not interested in all of your foreign-made products. And I’ve actually noticed quite a few of their plastic and resin products in recent years have been labeled in the U.S., which is, I think, really interesting.
So I think from a retail perspective, you know, they’ve been really undergoing this experiment on a broad scale. But I tend to notice that sometimes it’s like “assembled in America.” And I wonder, was there any granularity about how much consumers care about, like, full-term supply chain, or is it really just, I’m still supporting some aspect of American manufacturing?
Jason Miller: It’s primarily oriented towards that. You know, again, that “assembled in America” language. And at the end of the day, once you get outside of products — let’s say, you know, various food items, and even then that can be a stretch — but, you know, most products that we buy, even if they are produced here in the United States, you know, essentially that country of origin is the U.S., there is still globally sourced inputs going into that.
And even, you know, the rule of thumb is one out of every $6 of U.S. exports — and we are the world’s second-largest exporter of manufactured products after China — one out of every $6 of our manufactured exports actually comes from foreign-sourced inputs that, you know, go into those products and are then exported.
And so that, I think, you know, with the labeling issues, the idea that you’re going to get, I’m going to call it, sort of 100% pure American product — that’s very difficult in an era of global supply chains, because firms are making strategic decisions. Say, look, I’m getting my canola oil from Canada, I’m getting my wheat from Kansas. You know, I’m probably getting my packaging material from Georgia. But, you know, that’s still going to be a product that we’d consider to be, you know, assembled in America, but with globally sourced ingredients, if that canola oil is coming from Canada.
Kristen Mosbrucker-Garza: Yeah, we ran into that a lot here in Texas. So on the border, you know, we obviously produce a lot of cotton, right? And historically we used to have Fruit of the Loom factories down here. You know, at one point in time — we still produce a lot of that cotton, but then it’s exported and then essentially reimported once manufactured. So, you know, I think there’s a lot of complexity for sure.
And, you know, one of the things that I’ve noticed a lot is a lot of this reshoring and nearshoring here along the border. We actually just landed a company that has, I believe it’s like a GM contract or something. So they, for years and years, had a maquila in Río Bravo, which is right over the border near Reynosa.
But now they’re going to open one with 500 jobs, and it’s very high tech, and it’s like the brain of the vehicle, in a manufacturing space here in the U.S. It was 500 jobs. And they kind of said part of that is because they’re part of that global supply chain, and that’s what they heard from their customers. So, you know, I imagine, you know, that kind of trickles down to the final product of, hey, like, we’re supporting engineers in McAllen, for example.
Jason Miller: No, exactly. I mean, sticking in the auto industry, I mean, Michigan’s still the nexus of U.S. auto production. It’s not what it was 35 years ago, but it’s still by far the biggest auto manufacturing state. But it is not possible to obtain a fully made-in-America vehicle. Even U.S.-assembled vehicles tend to have a large number of auto parts from Mexico, from Canada, especially if you’re looking at a Japanese original equipment maker. There’s going to be a lot of parts from Japan. If it’s a German vehicle, there’s a lot of parts that come from Germany.
And so that, you know, that’s the world we live in for, you know, most products, is that, you know, even things assembled here in the U.S. that generate a lot of good, high-paying jobs, we’re still going to be relying on globally sourced inputs, because there’s world-class manufacturers all over the world, and U.S. firms seek them out because that is where they get the best value.
Kristen Mosbrucker-Garza: And so I wonder, you know, the Rio Grande Valley, which is very much where I cover, we are very much a lot of small businesses, right? You know, that’s primarily who our employers are. We don’t have as many big corporate headquarters here. You know, when it comes to supply chain, like, we also have a lot of, like, millennial-age business owners, right, who are selling to Gen Z and other millennials, who are maybe in that consumer sentiment population that y’all surveyed.
And so in terms of how they can refine or, you know, think about their supply chain, what advice would you have for local businesses who are maybe tech savvy, who are maybe, you know, digital natives, but, you know, maybe don’t have as much experience on the supply chain side, right? Because that’s a very specialized skill set.
Jason Miller: So, you know, step one is you really have to talk to your customers and know your customers. Understand what is the value they perceive from your offerings. Because once you have that sense of what they’re valuing, then you can essentially make those design decisions in terms of where do you source from? How do you start to set pricing, you know, improve price setting and things of that sort?
So it really always starts with understanding who your customer is. And it may be the end consumer. It may also be — in many instances, you know, a tremendous number of small U.S. manufacturers, they sell to a couple wholesalers who in turn find other buyers. And so that’s one where you need to talk to your wholesalers and say, look, you know, what is the unique thing that you’re looking for?
And so really, it all comes down to understanding your customer and then building, essentially, your strategy around that. And so, you know, right now, one of the things we are seeing in the U.S. is a thriving small business environment. Really, since the COVID pandemic, we’re seeing more small businesses being created today, for example, than what we did a decade ago.
That’s not saying that it’s easy times. Of course, we’re dealing with tariff uncertainty, energy shock. But that’s where also experience, I think, you know, for small businesses, is really helpful. So I’m always telling folks, if you’re going to start a new business, it’s probably a good idea to get into something you already know fairly well, because it just takes a lot of time to learn the ins and outs and the nuances.
Kristen Mosbrucker-Garza: Yeah. And, you know, I saw the Dallas Fed came out with a little bit of research this week about — you know, we all had a lot of projections about what may happen in a higher-tariff environment, right? And then there’s also the USMCA, right, which is that trade agreement, which now is on a yearly basis, which, you know, means less uncertainty, right, for a lot of corporations. But, you know, I thought it was interesting that even though we were in a higher-tariff environment, we actually saw more import-export activity.
And part of that was because of the data center, you know, products, and, you know, there’s just a lot of building. I mean, even down here, we have so much construction that even with lumber, even with cement — like, we have some of the highest cement prices, you know, in Texas right now, but it’s because we have so much demand for cement. We have companies like SpaceX who are building these giant, you know, launch pads and manufacturing sites and things like that.
So, you know, I just kind of wonder, you know, what other things could be happening in this higher-tariff environment other than, you know, maybe helping ease the price differential? Like, for example, I, you know, looked at some online prescriptions for my — you know, I have a bunch of animals. And I noticed that there’s now a tariff paid by, you know, the consumer for imported products from Australia or the U.K. or whatever that, you know, didn’t exist before. So does that kind of help with the price differential? If consumers are willing to pay, you know, 5% more, you know, does that kind of even out, or what could be happening here?
Jason Miller: Yeah. So I think splitting that into a couple pieces: You know, in general, the challenge with a lot of the tariffs in terms of spurring domestic production is simply the long-term viability of them is very much in question, because it was not done legislatively. And so it makes it hard to — you know, let’s take as an example things like toys. That’s an industry that used to be anchored in the United States 40 years ago, almost entirely offshored, outsourced from a production standpoint.
You saw a lot of tariffs put in place, but now we have conversation — we’re still awaiting the number — but tariffs on Chinese toys are going to be reduced. That right there just cuts against it if you want businesses to invest in making toys, and I’m not saying that’s a key strategic concern. But that is one of the challenges. And we’re really experiencing this in Michigan, because we’re so affected by the Canada tariffs that kicked in in August and, you know, kept escalating.
On the investment side, you know, you’re absolutely right. I mean, right now, the physical ecosystem for AI computing — that is really, like, the driving force behind economic growth. Texas is at the center of that in terms of the build-out. We just had, you know, reporting from The Wall Street Journal that Broadcom, SpaceX and Oracle are all looking at taking on more debt in order to buy computers and GPUs and things of that sort. And so you have just this, you know, ecosystem where there’s so much money flowing into it, it is generating tremendous amounts of economic activity. And we’re seeing that show up right now. And, you know, Texas is one of the big beneficiaries of that.
Kristen Mosbrucker-Garza: For sure. Well, I want to be mindful of your time. You know, so it sounds like this survey was really gauging consumer interest in buy-American products. And I kind of wonder — now we’re also in a pretty unique, not as high of inflation, but a somewhat inflationary, you know, situation. Also, we have diesel prices that, you know, are almost to 2022 levels. We’re seeing that a lot here on the border with trucking. You know, a lot of that is just kind of passed down to the consumer.
I wonder, you know, do you think y’all might look at this again, you know, maybe in six months to a year, to kind of get a better sense of, you know, in just sort of a higher cost-of-living environment, do people’s preferences still hold true?
Jason Miller: No, that would be something to, you know, take a look at. You know, as you mentioned, right now, you know, inflation is above where wage growth is at on a national level, based on BEA and BLS data. And so there’s certainly, you know, that pressure as well. We’ll really have to see. And, you know, at the end of the day, you know, we’ll see how things play out over the next few months in terms of that sort of inflationary picture.
Kristen Mosbrucker-Garza: Well, thank you so much for your time. I sincerely appreciate it. I hope you have fall leaves and not winter snow yet.
Jason Miller: Oh, it’s beautiful up here right now. It’s been one of the hottest, prettiest falls I can remember in my decade in Michigan. So thank you for that.
