Everything You Need to Know about the HTS Code

For international trading businesses, shipping and its associated logistics can be tedious and complicated. A specific coding system is required to ensure that the trading process is smooth and that the charges levied are accurate. Harmonized Tariff Schedule code or HTS code comprises numbers used to classify the products accurately. Doing so ensures that the customs process is smooth and accurate tariffs are applied. This code is instrumental in ensuring several factors, such as regulatory compliance, customs clearance, and seamless trade operation. Categorizing products incorrectly can attract hefty penalties and unnecessary delays, and an HTS code helps businesses do just that.

The HTS code uses the structure of the Harmonized System (HS) that the World Customs Organization or WCO manages. Governments worldwide recognize and use this system to correctly categorize the goods marked for international import and export. This standardized system ensures consistency and accuracy is maintained irrespective of the origin and target country. The HS assigns the first six digits of the HTS code, making it universally acceptable and recognized, thus ensuring that the right tariff is implemented and that the categorization of the good is accurate. This system makes the entire import and export process as seamless as possible.

HTS Code – Importance

A Harmonized Tariff Schedule or HTS code is critical for the import and export. They ensure that the goods are classified correctly, which is significant in ensuring that appropriate tariffs, regulations, and duties are levied. Business owners can use HTS code lookup tools to find the correct HTS code for their goods. For businesses in the U.S., the owners have to comply with certain duties and national regulations, which are included in the HTS code. The usage of the HTS code ensures compliance, which in turn avoids delays and heavy penalties. Using the HTS code can make the import and export operation much smoother for global trades. The code also ensures that the businesses comply with all the relevant rules and guidelines and that accurate duties and tariffs are levied on the goods.

HTS Code – Structure

The harmonized tariff schedule classifies goods into a standard organized system. Depending on each country, the HTS code is usually between eight to ten digits. The initial six digits of the code are universal Harmonized System or HS. The rest of the digits signify the subheadings used to calculate the duty rates of countries.

The Harmonized System or HS is used universally to identify and code goods in international trading. Due to its effectiveness and how seamless it makes the process of international trading; most countries use this system for their global import and export.

Let us look at each part of the HTS code individually.

• Chapter

The initial two digits of the HTS code signify the Chapter category. Currently, there are 99 Chapters in the international list of HS codes. These 99 Chapters are further grouped into 21 general sections. These numbers are the same or similar all over the world.

• Heading

Chapters are next classified into headings. These headings assist in narrowing the goods into the correct category. These are the next two digits after the Chapter. These numbers are also recognized worldwide

• Subheading

Headings are further classified as subheadings to classify the good into its correct type. Chapter, heading, and subheading comprise the six-digit code that is universally recognized. They help calculate import and export duties worldwide.

• Tariff Rate Line

The Tariff Rate Line is the next two digits in the HTS code. They are specifically levied for the United States, and duty rates are calculated.

• Statistical Suffix/Category

The final two digits of the HTS code are known as statistical suffix to collect trade data. They are specifically levied for the United States.

Looking up U.S. HTS Codes

The U.S. Census Bureau provides the Schedule B search tool that businesses can use to get goods in the United States. This tool is free and can be used to classify the goods imported very easily. People can enter the type of product they want to import, and the tool gives several suggestions until the correct classification is reached.

If the product is a little complicated to classify, people can also use the database of Customs Rulings Online Search System or CROSS to classify their product correctly.

Conclusion:

While the HTS code is crucial for the import and export of goods throughout the world, note that the code differs from country to country. Consequently, the HTS code, which is accepted in the United States, is not accepted, or recognized in another country. Every country in the world has its own categorization and, therefore, its HTS code, which calculates the duties, tariffs, and taxes to be levied. The first six digits to classify the product are universal; however, the remaining digits vary from country to country. Therefore, the best practice is to check and use the correct HTS code when shipping goods internationally. Not using the correct HTS code can result in customs delays, costly penalties, and unnecessary hassles.

Partnering with an experienced third-party logistics provider will ensure that the process of import and export of goods is smooth. They will ensure that the correct HTS code is applied depending on the destination country. They will monitor every step of the process, ensure that the duties and taxes are levied appropriately, and generate the correct HTS codes.

Connect XPDEL if you are looking for a professional 3PL partner to help you with the HTS code process.

About XPDEL:

XPDEL helps your brand grow with multi-channel fulfillment whether it’s shipping directly to consumers (D2C), delivering to businesses (B2B), or selling through retail stores. Our network provides nationwide coverage for fast delivery, our operations support products of all sizes and types, and our advanced technology ensures order accuracy and consistent customer experience.