WASHINGTON — A strange dynamic has gripped the Federal Trade Commission: President Trump’s biggest allies are the Democrats.
In a vote made public Wednesday, the commission’s two Democratic appointees voted to impose financial penalties on companies the agency found violated federal law by falsely marketing their products as “Made in America” when, in fact, most of their merchandise was manufactured in China.
But the three Republican commissioners — all appointed by Mr. Trump — overruled them and voted against imposing any fines or penalties at all. They said the companies should not be required to admit any wrongdoing or notify customers of their false marketing, arguing that the threat of future penalties served as a strong enough deterrent to prevent a repeat offense.
The vote, which took place on Tuesday, broke along party lines — just not necessarily the expected ones.
Since the 2016 election, Mr. Trump has promoted himself as the man who will resuscitate American manufacturing and jobs. In April 2017, he signed a “Buy American and Hire American” executive order, with the goal of promoting American-made goods “to ensure that American labor is hired to do the job.”
But on the F.T.C., Mr. Trump’s own appointees appeared to be out of step with the trade policy espoused by the president.
“The Republican commissioners didn’t get the memo from President Trump about the ‘Buy America, Hire America’ administration,” said Lori Wallach, director of the Global Trade Watch at Public Citizen, a consumer advocacy group.
White House officials declined to comment.
The case at hand involves three companies that the trade commission found violated the law. One was a New Jersey-based hockey puck manufacturer, Patriot Puck, which wrapped its China-made hockey pucks in American flags and falsely declared them “The Only American Made Hockey Puck!”
Two more companies, Sandpiper and PiperGear, manufacturers of deployment bags and tactical gear, marketed their wears to active and retired American military personnel, branded themselves online as #MadeInUSA, and put “American Made” tags in some of their products. In reality, most of those goods were also manufactured in China, according to the commission.
Mr. Trump’s handpicked chairman of the commission, Joseph J. Simons, defended the decision not to impose penalties on the companies. In a statement, Mr. Simons said “the threat of significant penalties” going forward had “been largely successful in keeping companies under order from making deceptive ‘Made in U.S.A.’ claims.” He argued that the decision was consistent with how the commission had dealt with similar cases in the past, and said it was a “strategic choice” to use the commission’s “limited resources” simply to make sure the companies did not break the law in the future.
But on Tuesday, one of the Democratic commissioners who had previously sided with Mr. Simons changed her position. “I am persuaded that we should seek disgorgement of ill-gotten gains and an admission of liability in these cases,” Rebecca Kelly Slaughter wrote in a dissenting statement. “And I understand that, if the companies refuse to agree to such terms, we would have to expend substantial resources for, and take on the risk associated with, litigation.”
The more stringent penalties, Ms. Slaughter said, “would send an unmistakable message that there will be meaningful consequences for brazenly mislabeling wholly imported products as American-made — even the first time that a fraudster gets caught.”
The agency’s other Democratic commissioner, Rohit Chopra, is taking the crusade against violators a step further, attempting to change the agency’s entire approach to handling “Made in America” violations.
Mr. Chopra, in a dissenting statement, argued that the F.T.C. was given the authority to activate steep penalties on first-time violators since the North American Free Trade Agreement was passed in 1994 but has simply never used it. Mr. Chopra said he wanted the trade commission to activate a legal switch to “turn on” penalties that would make violators pay $42,530 in fines per violation, starting on the first offense.
In many cases over the past two decades, settlements with companies that violated “Made in America” rules were subject only to record-keeping and reporting requirements to make sure they did not violate the law again.
“We cannot effectively protect honest businesses and promote fair competition if there are no consequences for violating the law,” Mr. Chopra said in his dissenting opinion. “Given troubling trends in today’s economy, I intend to make a motion to pursue a Made in U.S.A. rule that would allow the commission to seek meaningful penalties against those that harm law-abiding companies that make goods in America.”