Importers who outsource manufacturing in Asia need to ship their goods around the world to where they’re being sold. Understanding the difference between HS vs HTS codes could be the difference between paying higher or lower import duties, fees, and tariffs because adding the wrong one to your products’ shipment could cost you!
Here is a guide covering (almost) everything you’ll need to know about HS vs HTS codes, including which might be right for you and where to find them…
Introducing HS and HTS codes
Since the 1970s, Harmonized Commodity Description and Coding System or HS codes created by the World Customs Organization have been used to name and classify different products being shipped around the world.
They allow the products being traded between nations to be monitored and documented, easing the import process that would otherwise be slowed down by more searches and longer delays while customs officials did their work.
They’re also used by countries in a regulatory sense, and will often influence the level of import duties paid, especially in cases where a specific product type is subject to tariffs.
Importers will need to include a code/s on their shipments, but the questions are: should you be choosing between HS vs HTS codes, and which is best for you?
Why is selecting the correct code necessary, and how to choose between HS vs HTS codes?
Selecting the appropriate HS or HTS code is crucial because:
- It determines customs duties and taxes: When importing or exporting goods, HS and HTS codes establish the amount of customs duties, taxes, and other trade-related fees that must be paid. That’s why checking to see if a code that does not attract tariffs may be applicable to your product is important.
- It helps importers understand their unit cost, because any duties, taxes, and tariffs to be paid when the product is imported into its destination must be factored into it in advance.
- Selecting codes that attract fewer import costs may influence the importer to select different materials, components, or packaging for the product at an early product design and development stage in order to reduce their import cost burden.
- Correctly classifying items according to the HS or HTS code system helps to ensure compliance with trade regulations and prevent penalties for misclassification.
- The use of the codes streamlines the customs clearance procedure and reduces the costs and time associated with importing and exporting products.
- HS and HTS codes are used to collect trade statistics and data, which assists governments and corporations in making educated decisions regarding international trade.
- HTS codes will primarily be used by importers selling into the American market, so selecting those on this occasion is vital.
What if you select the wrong HS or HTS code?
Your merchandise may not be impounded if the incorrect code is selected, but there may be implications such as:
- Reclassification: Customs officials may reclassify the products, which may result in increased duties, taxes, and fees.
- Significant penalties may occur from the incorrect categorisation of products. The severity of the punishment will vary by country and case-specific conditions.
- Delays in clearing: Inaccurate classification can result in delays in customs clearance, leading to increased expenditures and annoyance.
- Reputational harm: Incorrect classification can harm an importer’s or exporter’s reputation, making future commerce more challenging.
Therefore, it is essential to conduct the necessary study and select the suitable HS vs HTS codes to prevent these repercussions. Speaking with your freight forwarder or a customs broker, for example, may help you to make the correct choice for your needs.
HS vs HTS codes: what are the differences?
These are two different kinds of codes, so let’s look at the differences between them.
Harmonized system codes, or HS codes, are standard codes used to classify goods and products for international trade. They are used to assess import and export customs charges, taxes, and other trade-related expenses. The World Customs Organization maintains HS codes, which are utilized by over 200 nations, including the United States.
However, it must be said that the USA does have its own variation of HS codes, namely HTS codes…
The United States uses the Harmonized Tariff Schedule (HTS) codes to classify commodities for the purpose of computing customs duties, taxes, and other trade-related expenses. The HTS codes are derived from the HS (Harmonized System) code system, which is a standard categorization system maintained by the World Customs Organization (WCO).
US customs authorities use the HTS codes to classify imported items and determine the applicable tariffs, taxes, and fees for each item. The HTS codes are also utilized by U.S. firms to identify the tariffs and taxes that will be charged to their imported products.
Similar to the HS codes, the HTS codes consist of a series of digits that designate different kinds of items, ranging from broad categories to particular commodity codes. Periodically, the HTS codes are changed to reflect changes in trade policies and regulations and to maintain consistency with the HS code system.
Are HS and HTS codes the same?
HS (Harmonized System) codes and HTS (Harmonized Tariff Schedule) codes are similar but not the same:
- The HS codes are a standard naming system used by customs agencies to classify commodities in order to determine customs duties, taxes, and other trade-related costs. The HS codes are utilized globally to facilitate trade and ensure that items are correctly taxed and controlled.
- On the other hand, the United States government uses HTS codes to classify commodities for the purpose of setting taxes and charges. The HTS codes are derived from the HS codes, but they also include information particular to the United States, such as duty rates, special rules, and restrictions.
Does each HS or HTS code have the same number of digits?
No, HS codes and HTS codes do not necessarily have the same number of digits.
- The HS codes consist of up to 10 digits, with each digit denoting a distinct classification level. The remaining digits may be used to refine the classification of a particular product. The first two digits represent the chapter, the next two represent the heading, and the remaining digits represent subheadings.
- The HTS codes, on the other hand, may contain up to 10 digits, although they may also contain fewer digits. The HTS codes are derived from the HS codes, but they also include information peculiar to the United States, such as duty rates, special rules, and restrictions. This additional information may cause the HTS codes to have fewer digits than the HS codes they belong to.
What is the structure of an HTS code?
Let’s take a sun shade umbrella as an example that is being imported into the USA, therefore the HTS code would be needed.
The HTS code for an outdoor umbrella used as a sun shade on a patio would be 6601.10.00. This code classifies outdoor umbrellas as a type of “umbrellas and sun umbrellas” under Chapter 66 of the HTS.
The HTS code 6601.10.00 can be broken down into the following classifications:
- Chapter 66: Umbrellas
- Heading 6601: Umbrellas, sun umbrellas, walking sticks, seat sticks, whips, riding crops, and parts thereof
- Subheading 6601.10: Garden or similar umbrellas
- Subheading 6601.10.00: Other
Each classification provides a more specific description of the product being classified, with the final subheading 6601.10.00 being the most specific classification for the outdoor umbrella as a sunshade on a patio.
The rate of duty according to the hts.usit.gov official website is 6.5%, whereas hand-held umbrellas that are chiefly used for protection against rain have a rate of duty of 0% (free). So you can see the importance of getting the correct code from a cost perspective.
What if I ship my goods without an HS or HTS code?
There is no way to export items without an HS code. Customs authorities use HS codes to classify commodities for the purpose of computing customs duties, taxes, and other trade-related costs. HS codes are required for international trade.
If products are transported without an HS code, they may be delayed or returned to the sender at customs. In certain instances, customs authorities may grant a provisional HS code; however, this may incur additional fees and administrative charges.
Therefore, it is essential to assign the correct HS code to the items prior to shipment in order to avoid any delays, additional costs, and compliance difficulties.
Where do you find a list of HS and HTS codes?
A list of HS and HTS codes can be obtained in many ways:
- Official websites:
HS codes: https://www.tariffnumber.com/ and https://www.gov.uk/trade-tariff
HTS codes: https://hts.usitc.gov/
(Many nations have government websites that allow access to their national HS code listings, such as the European Customs Portal and US International Trade Commission’s Harmonized tariff schedule above.)
- Website of the World Customs Organization (WCO): The WCO administers the HS code system and provides online access to the HS code list here https://www.wcotradetools.org/en/harmonized-system/2022/en/
- Trade groups, such as chambers of commerce, frequently provide access to HS code listings for their member nations.
- Some commercial websites, including import/export service providers, charge a fee for access to HS code lists.
Note: The HS code list is periodically changed by the WCO, it is essential that you utilize the most recent version.
How do I determine the correct HS vs HTS codes for my product?
Follow these methods to determine the correct HS or HTS code for your product:
- Review the list of HS or HTS codes: Access the most recent version of the HS or HTS code list via a government website, the WCO website, or a trade group website (see above).
- Examine the product description: What is its composition, function, and intended purpose? Think about which category/ies are appropriate. Is there one that you’re satisfied is correct but attracts lower rates of duty or tariffs?
- Consider special rules of origin. Certain codes have specific rules of origin dictating where a product must be created to qualify for that code.
- Consult an expert: If you are unclear about the correct HS or HTS code, consult a customs broker, your freight forwarder, your manufacturer, a trade association, or a government trade agency (although a word of warning about relying on your manufacturer…while they may know a correct HS or HTS code for your product type, it’s typically not in their interest to do thorough research to try to find a ‘better option’ as they are motivated to get the product shipped out quickly, so they may not provide the most effective guidance for reducing costs).
It is essential to assign the correct HS or HTS code to a product, as erroneous classification can lead to additional costs, penalties, and compliance concerns.
How to find HS codes? (An example: Steel bicycle front forks)
The best way to understand how to find HS codes is to see the process in action, so here’s an example where we’ll search for the correct code for steel bicycle front forks using the UK government’s HS code finder (this is not UK-specific, as HS codes are used globally aside from in the USA which uses HTS codes).
Do I have to pay for HS or HTS codes?
No, HS codes are not subject to a fee. They are a standardized system of classification maintained by the World Customs Organization (WCO) and are available for use by its member countries, including their customs authorities, businesses, and other stakeholders, without charge.
What are the different HTS sections (USA-specific) for categorizing products?
The harmonized tariff schedule (HTS) is organized into sections and chapters that categorize products according to their nature, origin, or final use. Customs authorities use the HTS to establish the applicable tariff rate for imported items.
Here are the sections of the HTS:
- Section I – Live Animals; Animal Products
- Section II – Vegetable Products
- Section III – Animal or Vegetable Fats and Oils and Their Cleavage Products; Prepared Edible Fats; Animal or Vegetable Waxes
- Section IV – Prepared Foodstuffs; Beverages, Spirits, and Vinegar; Tobacco and Manufactured Tobacco Substitutes
- Section V – Mineral Products
- Section VI – Products of the Chemical or Allied Industries
- Section VII – Plastics and Articles thereof; Rubber and Articles thereof
- Section VIII – Raw Hides and Skins, Leather, Furskins and Articles thereof; Saddlery and Harness; Travel Goods, Handbags and Similar Containers; Articles of Animal Gut (Other than Silkworm Gut)
- Section IX – Wood and Articles of Wood; Wood Charcoal; Cork and Articles of Cork; Manufactures of Straw, of Esparto, or of Other Plaiting Materials; Basketware and Wickerwork
- Section X – Pulp of Wood or of Other Fibrous Cellulosic Material; Recovered (Waste and Scrap) Paper or Paperboard; Paper and Paperboard and Articles thereof
- Section XI – Textile and Textile Articles
- Section XII – Footwear, Headgear, Umbrellas, Sun Umbrellas, Walking-Sticks, Seat-Sticks, Whips, Riding-Crops, and Parts thereof; Prepared Feathers and Articles Made Therewith; Artificial Flowers; Articles of Human Hair
- Section XIII – Articles of Stone, Plaster, Cement, Asbestos, Mica or Similar Materials; Ceramic Products; Glass and Glassware
- Section XIV – Natural or Cultured Pearls, Precious or Semi-Precious Stones, Precious Metals, Metals Clad with Precious Metal, and Articles thereof; Imitation Jewelry; Coin
- Section XV – Base Metals and Articles of Base Metal
- Section XVI – Machinery and Mechanical Appliances; Electrical Equipment; Parts thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers, and Parts and Accessories of such Articles
- Section XVII – Vehicles, Aircraft, Vessels, and Associated Transport Equipment
- Section XVIII – Optical, Photographic, Cinematographic, measuring, checking, precision, medical, or surgical Instruments and apparatus; clocks and watches; musical instruments; part and accessories thereof
- Section XIX – Arms and Ammunition; Parts and Accessories thereof
- Section XX – Miscellaneous Manufactured Articles
- Section XXI – Works of Art, Collectors’ Pieces, and Antiques
What are the different HS sections (the rest of the world) for categorizing products?
These are different to the HTS codes used for importing goods into the USA so care must be taken when selecting the correct code. The list below are HS codes used for the rest of the world.
Here are the 21 sections of the Harmonized System (HS) code system:
- Live animals
- Meat and edible meat offal
- Fish and crustaceans, molluscs and other aquatic invertebrates
- Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or included
- Products of animal origin, not elsewhere specified or included
- Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage
- Edible vegetables and certain roots and tubers
- Edible fruit and nuts; peel of citrus fruit or melons
- Coffee, tea, maté and spices
- Products of the milling industry; malt; starches; inulin; wheat gluten
- Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruits; industrial or medicinal plants; straw and fodder
- Lac; gums, resins and other vegetable saps and extracts
- Vegetable plaiting materials; vegetable products not elsewhere specified or included
- Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes
- Preparations of meat, fish, or crustaceans, molluscs or other aquatic invertebrates
- Sugars and sugar confectionery
- Cocoa and cocoa preparations
- Preparations of cereals, flour, starch or milk; pastrycooks’ products
- Preparations of vegetables, fruit, nuts or other parts of plants
- Miscellaneous edible preparations
On the topic of logistics, you may also find the following resources useful:
- Shipping Marks
- Types of Incoterms [Guide]
- Demurrage vs Detention
- Get help from Sofeast to handle the whole logistics process from door to door: Logistics management solution
We are not lawyers. What we discussed above is based only on our understanding of legal requirements and regulations. Sofeast does not present this information as a basis for you to make decisions, and we do not accept any liability if you do so.