You pick up a bottle of chili powder. The label says "Product of USA." You feel good about buying American.
But what if I told you it might have just been bottled in the U.S.—and the chili peppers actually came from China?
That's not speculation. It's happening right now.
In July 2026, the ABC investigative program Four Corners revealed something shocking: multiple well-known Australian food brands were allegedly mislabeling tomato products made from Chinese raw materials as "Australian grown."
The investigation took eight months and was conducted by Source Certain—a forensic laboratory that has worked with the FBI, London's Metropolitan Police, and Interpol. The lab used Trace Element Analysis (TEA) and Stable Isotope Ratio Analysis (SIRA) to detect chemical fingerprints left by soil, water, and climate—verifying the true origin of food products.
The results: among 221 processed tomato products from 39 brands, 22% failed origin verification—all of them traced back to China. Of those, 53% were traced to Xinjiang, with the rest coming from other regions of China.
Brands implicated included U.S. food giant Simplot's Australian brand Leggo's (27 of 33 products failed testing), Coles' private label, and discount supermarket Aldi's Remano tomato paste.
This isn't just an Australian problem. In U.S. supermarkets, products with "ambiguous origins" are everywhere.
In January 2026, U.S. Customs and Border Protection (CBP) issued a ruling on the country of origin for red chili pepper powder (NY N356879).
The product description was straightforward: 100% pure red chili powder, with no added spices, starches, colorants, or preservatives.
But the production process told a more interesting story—fresh chili peppers were grown and harvested in China, frozen, then shipped to Korea for drying, heat sterilization, and milling, and finally packaged for export to the U.S.
CBP's conclusion: the country of origin is Korea, not China.
Why? Because CBP determined that the drying, heat treatment, and milling performed in Korea constituted "substantial transformation"—the product acquired a "new name, character, or use."
In other words: Chinese chili peppers, after "Korean processing," legally become a "Korean product."
The USDA's December 2025 updated country-of-origin labeling guidelines made it even clearer: regional claims like "Product of North America" are permitted, as are multi-country origin claims like "Product of USA and Canada"—but they must be accompanied by a statement explaining which processing steps were completed in the U.S.
One Australian supermarket manager put it well: "Consumers have a right to know where their food actually comes from, don't they?"
If chili powder's "identity trick" is legal, then the "identity packaging" of finished products may cross the line of consumer expectations.
Take a typical example: California Gold Nutrition's Organic Paprika Ground. The label clearly states: "Product of USA," with USDA organic certification.
The label says "Paprika (chili peppers) origin: USA."
But if the upstream chili powder may have been Chinese peppers "repackaged" through processing in a third country, just how genuine is that "Product of USA" claim? Do consumers really know what they're buying?
The core of U.S. country-of-origin labeling law is Section 304 of the Tariff Act of 1930 (19 U.S.C. § 1304) and its implementing regulations (19 CFR Part 134). All imported goods must be marked with their country of origin, so consumers know where the product was made.
The COOL Online Act (S.294) introduced in the U.S. Congress is particularly worth watching in 2026—it would require online sellers to display country of origin and seller location prominently on their websites.
For spices like chili powder, there's a special rule: under 19 CFR § 134.33's "J-List," red chili powder (classified under HTSUS 0904.22) is exempt from country-of-origin marking requirements—its container does not need to be labeled with the country of origin.
This exemption, combined with the flexible "substantial transformation" standard, creates a legal pathway for the supply chain: Chinese raw materials → third-country processing → U.S. sale.
If you're a U.S. food wholesaler or buyer:
1. The country-of-origin label isn't the whole truth.
"Product of USA" may only mean "the final processing step was completed in the U.S." The upstream raw materials could have come from China, Vietnam, or India. Don't just look at the label on the package.
2. "Substantial transformation" is both a legal pathway and a gray area.
Chinese chili peppers processed in Korea can legally be labeled "Product of Korea" before entering the U.S. It's not illegal—but consumers may never know where the raw materials actually came from.
3. Verify your supply chain documentation.
Require suppliers to provide complete raw material traceability records. If a product says "Made in the U.S.," ask "Where did the ingredients come from?" In the Australian investigation, every implicated company claimed they had "complete traceable documentation"—but forensic testing told a different story.
4. Understand the J-List exemption.
Red chili powder (0904.22) is exempt from marking requirements—meaning it's not required to be labeled with country of origin. But if you want to build consumer trust, proactively disclosing the real source may be wiser than simply "legally not labeling."
How much "Made in USA" food in U.S. supermarkets is actually Chinese?
If "fake" means hiding the true source and misleading consumers—then yes, quite a lot. Tomato paste, chili powder—the raw materials for these products may come from China, but after third-country processing or final U.S. processing, they end up labeled "Made in the USA" or "Product of [some country]."
Not all of it is illegal. But consumers probably know a lot less than they think they do.
