If you import products into the United States, you need to know how to use the Harmonized Tariff Schedule of the United States (HTSUS). Even if your company only exports, understanding HTS codes can help you communicate more effectively with suppliers, customers and customs brokers around the world.
Proper product classification has always been important. But in recent years, it has become even more critical. Duty rates, special tariffs, trade remedies and free trade agreement eligibility often depend on how a product is classified. Choosing the wrong code can lead to overpaying duties, underpaying duties, customs delays or unwanted scrutiny from government agencies.
In this article, we'll explain what the HTSUS is, how it differs from HS and Schedule B codes, why classification matters more than ever and how to find the correct code for your products.
The Harmonized Tariff Schedule of the United States (HTSUS or HTS) is the system used to classify products imported into the United States.
The HTSUS is based on the international Harmonized System (HS), which is maintained by the World Customs Organization (WCO). More than 200 countries and economies use the Harmonized System as the foundation for classifying traded goods.
The HTSUS expands upon the six-digit international HS code by adding additional digits that provide greater detail for U.S. imports.
U.S. Customs and Border Protection (CBP) uses HTSUS classifications to determine:
Nearly every product imported into the United States must be assigned a 10-digit HTSUS number.
Like a library classification system, the HTSUS organizes products into chapters, headings and subheadings based on factors such as a product's material composition, intended function and physical characteristics.
For many years, companies viewed classification primarily as a customs requirement.
Today, classification affects much more than ordinary customs duties.
For example, additional duties and trade remedies often apply only to products classified under specific HTSUS provisions. In some cases, two products that appear very similar may be subject to different duty treatment because they are classified differently.
Material composition has become particularly important. Whether a product is made primarily of steel, aluminum, plastic, wood or another material may affect not only its classification but also the duties that apply.
That's one reason experienced importers spend considerable time reviewing product specifications before assigning an HTS code. The product name alone is rarely enough.
Just as determining the correct country of origin has become increasingly important, determining the correct HTS classification has become a key part of managing import compliance and controlling landed costs.
Let's look at an HTS code example for umbrellas: 6603.20.3000, which includes the description:
For hand-held umbrellas chiefly used for protection against rain
This differs from HTS code 6603.20.9000, which covers other hand-held umbrellas not chiefly used for protection against rain.
In this example:
The first six digits correspond to the international HS code used around the world. The final four digits provide additional classification detail specific to the United States.
This example illustrates an important point: classification often depends on specific product characteristics. Two products that most people would simply call "umbrellas" may require different classifications.
One of the most common sources of confusion is the difference between HTS codes and HS codes.
The Harmonized System (HS) is the international classification framework maintained by the World Customs Organization.
Every HS code contains six digits:
Those first six digits are generally recognized around the world.
Individual countries then add additional digits to create their own national classification systems.
In the United States, those additional digits become the HTSUS number used for imports.
Many exporters are more familiar with Schedule B numbers than HTS codes.
Although the two systems are closely related, they serve different purposes.
HTS codes are primarily used for imports into the United States.
Schedule B numbers are used to report exports from the United States.
The U.S. International Trade Commission maintains the HTSUS, while the U.S. Census Bureau maintains Schedule B numbers.
Both systems use the same first six digits derived from the international Harmonized System. However, the final digits may differ.
Most Schedule B numbers are derived from HTSUS classifications, but they are maintained separately for export reporting purposes.
If your company imports and exports products, maintaining HTS classifications as your primary product classification often makes sense. Since HTS codes are already required for imports, many companies use those classifications throughout their ERP, inventory management and compliance systems.
However, companies that only export products may find Schedule B numbers easier to use because they are generally less detailed and are specifically designed for export reporting.
Keep in mind that the Census Bureau publishes a list of HTS numbers that cannot be used as Schedule B substitutes for export reporting.
One of the biggest mistakes companies make is assuming that product classification is simply a matter of finding a product name that appears to match.
In reality, classification often requires a deeper analysis.
Factors that may affect classification include:
For example, two products made of similar materials may be classified differently because they perform different functions. Likewise, two products that perform similar functions may be classified differently because they are made from different materials.
This is one reason classification can become challenging for complex industrial products, assemblies, electronic equipment and manufactured components.
Many importers and exporters are now turning to AI tools for help with product classification.
AI can be useful for identifying potential classifications and narrowing the range of possibilities. It can also help users understand classification terminology and locate relevant sections of the HTSUS.
However, AI should not be viewed as a substitute for classification expertise.
An AI system can only work with the information it receives. If important details about the product's composition, function or construction are missing, the suggested classification may be inaccurate.
Even when AI identifies a likely classification, companies should still review the applicable HTSUS provisions, chapter notes and supporting guidance before relying on the result.
Think of AI as a research assistant, not the final decision maker.
Several resources can help you classify products correctly.
The U.S. International Trade Commission provides free access to the complete HTSUS database.
You can search by keyword, browse chapters and review detailed classification descriptions.
The Census Bureau offers a free Schedule B search tool that can help identify export classifications.
If your product is difficult to classify, the Customs Rulings Online Search System (CROSS) can be extremely valuable.
CROSS contains official CBP classification rulings issued in response to requests from importers and other parties.
Reviewing rulings for similar products can provide useful insight into how CBP interprets specific classification questions.
Additional resources include:
For complex products, seeking expert guidance is often far less expensive than correcting a classification error later.
Sometimes the correct classification is not obvious.
In those situations, importers may request a binding ruling from CBP.
Binding rulings are particularly useful when:
Once CBP issues a binding ruling, importers gain greater certainty regarding the classification of the specific product described in the ruling request.
For companies importing large volumes of a product, a binding ruling can provide valuable compliance protection.
Some of the most common mistakes include:
A classification that was appropriate several years ago may not necessarily be appropriate today, especially if product designs or HTSUS provisions have changed.
The Harmonized Tariff Schedule of the United States is much more than a list of product codes. It serves as the foundation for import classification, duty determination and many customs compliance obligations.
As tariffs, trade remedies and supply chain costs continue to receive increased attention, accurate product classification has become more important than ever.
Whether you are importing products into the United States, exporting goods around the world or managing both activities, taking the time to classify products correctly can help reduce compliance risks, avoid unnecessary costs and improve supply chain efficiency.
Shipping Solutions Product Classification Software helps companies organize and manage HTS, Schedule B and ECCN classifications in a centralized database. You can try it free and see how it can simplify product classification and trade compliance management.
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This article was first published in May 2019 and has been updated to include current information, links and formatting.