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If you are not an American, you have probably heard you are not supposed to buy something from a foreign firm, even if it was made in a foreign country.

That rule is sometimes referred as the Buy American and Hire American law and is very commonly applied by the government to federal contractors. The problem is that there is a loophole that lets you buy goods and services made for your own use, though a big part of the problem is that many businesses are not complying with the law.

In October of 1998, then-Solicitor General Ted Olson issued a controversial opinion that stated that “the rule against buying goods or services made abroad … is not inconsistent with the policy of promoting U.S. interests abroad” which was to “implement the policy of promoting U.S. manufacturing, promoting exports and foreign trade and expanding access to U.S. markets by foreign-owned companies.”

In other words, the United States does not have to do what the law dictates, and some companies may see it as a loophole to sell goods in other countries after tax and without any taxes, whether a company has a U.S. manufacturing or the sales take place in the U.S.

In July of 2014, however, the U.S. Supreme Court overturned the Olson opinion, saying that it was based on “the wrong test and is contrary to the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes.” The case revolved around a company that moved a vast supply chain, which had been in the U.S. for decades, from Canada to Mexico using a “brick-and-mortar” structure. That structure was an arrangement in which a company owned the bricks, then a subsidiary, then a separate chain of brick-and-mortar locations and then sold those products online. The structure gave this company a large profit in Mexico, but the company would be subject to a tax of 50 percent on its overseas sales.

As it turned out, this method of distribution was legal, but some in Congress felt that a company that was not being taxed on its overseas sales should be exempt from federal tax laws on its profits that take place in the U.S. This is what the “Buy American” law is about.

In order for a company to qualify as “U.S.-owned and operated,” you must have at least 50 percent of your workforce in the U.S.

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