The Federal Trade Commission recently closed its investigation into high-end watchmaker Niall Luxury Goods over whether the firm overstated the extent to which its watches are U.S. made, since some key components were sourced overseas.

In order to say a product is made in or built in the U.S., the significant parts, processing and labor going into it have to be of U.S. origin, according to the FTC.

An FTC letter to Niall indicated that its watch movements, which the agency called “essential to the function of a watch,” are made in Switzerland, which limits Kansas City-based Niall’s ability to make “Made in USA” claims.

“The enforcement policy statement is based on consumer perception evidence; that’s always the touchstone from our point of view. How would a reasonable consumer understand the claim?” said Julia Solomon Ensor, an attorney with the FTC.

The rules may present challenges to watchmakers, who routinely source movements from Switzerland.

“From my personal opinion, there are no companies in the U.S. right now that could truthfully use the ‘Made in USA’ label,” said Nicholas Manousos, vice president of the Horological Society of New York, a watchmaking guild.

Manousos said he’s skeptical of what he sees as a growing number of watch companies claiming their products are American-made.

Still, luxury goods maker Shinola said it’s sticking by the ‘Built in Detroit’ label on its high-end watches, even if some components come from Switzerland or China.

“I think it’s the closest representation as to what we’re doing,” said Shinola founder Tom Kartsotis.

Kartsotis said while parts making up the movements come from overseas, U.S. workers put them together. He said the firm’s website makes foreign sourcing of materials clear.

Moreover, the firm said Shinola watches are stamped with the phrase “U.S.A. movement with Swiss parts.”

Julia Solomon Ensor said the FTC couldn’t address whether Shinola’s claims meet the agency’s criteria. The FTC doesn’t comment on individual companies.