From the FTC website:
Products made in the U.S.A. with imported materials
The label must indicate that the product contains imported materials. The label may identify the country of origin of the imported materials, but it doesn’t have to. It can say simply: “Made in U.S.A. of imported fabric” or “Knitted in U.S.A. of imported yarn.” This disclosure must appear as a single statement, without separating the “Made in U.S.A.” and “imported” references.
Manufacturers should be aware that for certain products — including sheets, towels, comforters, handkerchiefs, scarfs, napkins, and other “flat” goods — Customs requires identification of the country where the fabric was made.
37 To comply with Customs and FTC requirements for this group of products, the label must identify both the U.S. and the country of origin of the fabric. For example: “Made in U.S.A. of fabric made in China” or “Fabric made in China, cut and sewn in U.S.A.”
Here is the webpage:
Threading Your Way Through the Labeling Requirements Under the Textile and Wool Acts