Importing items into the USA, and subsequently working with US Customs, comes with additional course of and paperwork. US Customs requires companies to declare the gadgets they’re importing into the nation utilizing an vital identifier, referred to as an HTS code. 

Understanding how one can import your items via customs, together with the correct use of HTS codes, will provide help to keep away from complications on the border and guarantee there are not any maintain ups or delays on the subject of shipments and ultimately getting merchandise into the arms of your prospects. Right here, we’ll define how HTS codes work, how one can decide the HTS codes in your items, and the ramifications of improper utilization—together with charges, sudden inspections, seizures, and penalties levied by US Customs. 

HTS code definition

An HTS code is a novel 10-digit quantity that determines the tariff tax or responsibility incurred on gadgets imported into the USA from different international locations. HTS codes are maintained by the USA Worldwide Commerce Fee, however enforced by Customs and Border Safety (CBP) of the Division of Homeland Safety.

HTS codes: understanding the terminology

The world of worldwide ecommerce and imports can really feel difficult, in no small half as a consequence of a slew of phrases and acronyms that make understanding processes even tougher. Earlier than we dive into how HTS codes work, let’s outline a few of the governing our bodies and phrases you’ll encounter as you navigate the world of imports:

World Customs Group

Established in 1952 because the Customs Co-op Council, the World Customs Group (WCO) is an unbiased intergovernmental physique representing 183 customs directors around the globe, accountable for roughly 98% of worldwide commerce. They work to create uniformity, concord, and effectivity in customs laws throughout international locations. The WCO established and maintains the Harmonized Commodity Description and Coding System, sometimes known as the Harmonized System or the HS.

Harmonized System (HS)

Formally referred to as the Harmonized Commodity Description and Coding System, the HS is a common language for figuring out and coding items being traded internationally. In different phrases, it’s a nomenclature for transportable items. Virtually all international locations use this method for his or her customs tariffs and for commerce statistics. The final model of the HS was put in place in 2017, whereas a brand new model will likely be launched and take impact on January, 1, 2022. 

HS code

A six-digit code that categorizes every imported good. The primary two digits characterize the chapter, the center two digits characterize the heading inside the chapter, and final two digits characterize the sub-heading inside the heading. 

Harmonized Tariff Schedule (HTS) 

Introduced into impact in 1989, the HTS is a hierarchical numerical construction for describing items for responsibility, quota, and statistical functions in the USA. The system relies upon the HS. Bear in mind that the HTS is usually known as the Harmonized Tariff Schedule of the USA (HTSUS).

HTS code

A ten-digit code that categorizes every imported good. The primary six digits are an HS code. The following two digits establish the US subheading of the HS code to find out the responsibility price, whereas the ultimate two digits are a statistical suffix. 

United States Worldwide Commerce Fee (USITC)

Established in 1916, the USA federal company answerable for trade-related mandates. It maintains the Harmonized Tariff Schedule (HTS). 

Customs and Border Safety of the Division of Homeland Safety (CBP)

Established in July 1789 and consolidated into its present type in March 2003, US Customs and Border Safety is charged with sustaining the integrity of the nation’s borders and ports of entry. It enforces the HTS.

Statistical Classification of Home and International Commodities Exported from the USA (Schedule B)

Schedule B is the statistical classification for items exported from the USA. It’s maintained and printed by the USA Census Bureau and relies on the HS.

Schedule B code

A ten-digit worldwide code that categorizes every exported good. 

A quick historical past of the HTS

Whereas virtually all international locations use the HS to find out tariffs and classify imported items, the USA makes use of the HTS. The HTS was enacted by Congress and introduced into impact on January 1, 1989. The system relies on the HS, not like the earlier Tariff Schedules of the USA it changed. 

Whereas the USITC maintains and publishes the HTS, CBP is accountable for decoding and implementing the HTS. 

How the HTS works

The HTS is used to categorise imported items primarily based on a variety of traits like composition, product title, and performance. Probably the most up-to-date model of the HTS will be discovered on the USITC authorities web site, spanning 22 sections and 99 chapters classifying a variety of various items. Every part has part notes at the start of the part and every chapter has chapter notes. Three chapters of the HTS serve totally different functions than the remainder: Chapter 77 is reserved for future use, whereas chapters 98 and 99 are reserved for nationwide use and must also be consulted when classifying items. 

The HTS contains Normal Notes, Normal Guidelines of Interpretation (GRIs), Normal Statistical Notes, and extra tips with further descriptions and clarifications it is best to discuss with when classifying items and understanding tariff charges. 

The HTS is split into chapters, headings, and subheadings that decide the HTS code for every good. The HTS consists of over 10,000 particular person codes belonging to particular gadgets.

For instance, Part II, Chapter 9 classifies “Espresso, tea, maté and spices” and will likely be related if you happen to’re importing cinnamon into the US. Inside this chapter, you’ll discover HTS codes, descriptions, and responsibility charges for items just like the aforementioned cinnamon, in addition to inexperienced tea, saffron, and extra. 

Construction of HTS codes

All HTS codes are 10 digits lengthy and damaged down into 5 totally different sections. Moreover, as coated earlier, the primary six digits are the HS quantity underneath the worldwide HS. 

Right here’s the breakdown of an HTS code:

  • Chapter: These first two digits establish the chapter within the HTS. The numbers are constant internationally. 
  • Heading: These subsequent two digits establish the heading inside that chapter within the HTS. The numbers are constant internationally. 
  • Subheading: These subsequent two digits establish the subheading inside that chapter. The numbers are constant internationally. 
  • Subheading (Tariff price traces): These subsequent two digits set up responsibility charges. These numbers are particular to the USA.
  • Statistical suffix: These final two digits are statistical suffixes that gather commerce information. These numbers are particular to the USA.

Let’s check out an instance of an HTS in motion and see how we might classify the HTS of licensed natural inexperienced tea (flavored):

Right here’s a breakdown of the HTS code: 0902.10.90.15.

Moreover, the HS variety of licensed natural inexperienced tea (flavored) is 09.02.10.

How HTS codes work

HTS codes will be positioned in particular person HTS PDFs of every chapter, downloadable on the HTS web site, or they are often seemed up within the HTS search database. 

As an illustration, in the identical instance for importing cinnamon, the HTS code will be positioned inside Chapter 9:

Every HTS chapter is given a two-digit quantity. Within the case of Chapter 9, all items categorised on this chapter begin with the identical two digits (e.g., 09). Inside this chapter are four-digit headings, listed within the Heading/Subheading column. Within the instance of “Cinnamon and cinnamon-tree flowers,” the suitable heading is 0906. Additional descriptions seem within the Article Description column. 

As you go additional down, extra particular classifications of cinnamon have totally different 10-digit HTS codes that mix the heading/subheading and stastifical suffix:

  • Cinnamon-tree flower, neither crushed nor floor, has an HTS code of 0906.11.00.00
  • Cinnamon (different) has an HTS code of 0906.19.00.00
  • Cinnamon (crushed or floor) has an HTS code of 0906.20.00.00.

The HTS code of an merchandise tells you the responsibility (or tariff) on an imported good within the Charges of Obligation column, primarily based on the amount within the Unit of Amount column. The charges of responsibility is split into three totally different sub-columns: 

  • Column 1 (Normal): The speed of responsibility utilized to imports from international locations with which the USA maintains “regular commerce relations.”
  • Column 1 (Particular): The speed of responsibility utilized to particular tariff therapy packages comparable to free commerce agreements or the generalized system of preferences.
  • Column 2: The speed of responsibility utilized to imports from international locations the USA doesn’t preserve regular commerce relations with, specifically Cuba and North Korea. 

There are three sorts of responsibility charges you will notice within the HTS:

  • Advert valorem: A share utilized to the nice’s customs worth (e.g., 2.5%). 
  • Particular: A worth per amount of the nice (e.g,. $0.05 per kilogram). 
  • Compound: An advert valorem and a particular worth per amount of the nice (e.g., 2.5% + $0.05 per kilogram). 

Now, again to our cinnamon instance. Right here’s what we are able to decide from the HTS quantity (0906.20.00.00) of crushed or floor cinnamon:

  • Importing from most international locations is free and doesn’t have an obligation tax hooked up. 
  • If you happen to hover over the hooked up notice, you’re referred to 9903.88.15 in Chapter 99 on Momentary Laws within the HTS. Whenever you navigate to this part, you will see the next said: “For the needs of heading 9903.88.15, merchandise of China, as offered for on this notice, shall be topic to an extra 7.5 p.c advert valorem price of responsibility.”
  • Primarily based on Column 2, the precise price of responsibility utilized to this merchandise from Cuba and North Korea is $0.11 per kilogram. 

As an entrepreneur, figuring out the HTS code of a product doesn’t solely present a tax price on importing it into the US, it can also present perception on the perfect place to supply your merchandise in probably the most cost-effective method to extend the upside of what you are promoting. 

HTS vs. Schedule B

Schedule B is the statistical classification for items exported from the USA. It’s maintained and printed by the USA Census Bureau and primarily based on the HS. Schedule B codes are utilized by the US authorities to watch US exports 

Whereas a superb’s Schedule B code and HTS code will be the identical, Schedule B and the HTS are totally different programs that serve totally different functions. As a enterprise proprietor, it is best to use HTS codes when importing and Schedule B codes with exporting. 

Listed here are the similarities between HTS codes and Schedule B codes: 

  • HTS codes and Schedule B codes are 10 digits lengthy. 
  • The primary six digits of HTS codes and Schedule B codes are the identical because the HS code. 

Listed here are the variations between HTS and Schedule B:

  • HTS codes are used for imports; Schedule B codes are used for exports. 
  • HTS codes are ruled by the USITC and enforced by US Customs; Schedule B codes are ruled by the USA Census Bureau. 

Avoiding points with HTS codes

Figuring out how one can learn the HTS and understanding what every HTS code means will provide help to keep away from points that may come up with customs. Right here are some things to remember as a enterprise proprietor importing items into the USA: 

  1. You’re accountable for the correct HTS code. Alongside the export journey, you’re prone to are available contact with a provider and a freight forwarder. Each entities are required to declare the HTS codes of the gadgets they’re supplying and forwarding, respectively. Nonetheless, because the “importer of report,” you’re in the end accountable for utilizing the correct HTS code. Do your individual analysis to confirm any code you’re offered within the HS to make sure it’s appropriate. 
  2. Use the proper code, not the advantageous code. On the HTS, it’s not unusual to have an merchandise that might plausibly match underneath a number of totally different codes. It’s vital to decide on the code that’s most appropriate, reasonably than the code that has the bottom tariff price. As a rule of thumb, use the code that describes your items in its situation as imported, as a Customs agent would view it on the port of entry. Moreover, you may discuss with the Normal Guidelines of Interpretations, six ideas shared within the HTS, for extra steering on classifying items. If you’re uncertain, attain out to the USITC immediately for assist. 
  3. Pay attention to commerce agreements and packages. The US has commerce agreements that end in lowered tariffs or no tariffs on particular items. These commerce agreements may also change. They are often discovered proper on the HTS underneath Column 1 (Particular). Discuss with the Normal Notice part of the HTS for extra particulars on guidelines and situations for acquiring specific tariff therapy and understanding varied commerce agreements, like NAFTA.

Penalties of improper HTS code use

Sadly, incorrect use of HS codes in your merchandise can have penalties—comparable to delays, heightened inspections, charges, penalties, and seizures—that impression what you are promoting and forestall your items from coming into the USA and attending to your prospects. 

An knowledgeable compliance publication, printed by US Customs and Border Safety in 2004 and up to date in 2020, outlines the results for not exercising cheap care within the remaining classification and worth of merchandise:

“The classification and valuation of products is a crucial a part of the importation and entry course of. At a minimal, incorrect classification or valuation might result in delays and elevated duties (plus curiosity). The failure to make use of cheap care in both scenario might also result in detention or seizure of the merchandise, and the imposition of civil or felony penalties.”

As a service provider, you’re thought of the importer of report and are in the end accountable for the correct classification of your items. Getting HS codes proper will stop these penalties from being levied by US Customs.

Including HS codes to your Shopify items

Whereas Shopify doesn’t at present help including HTS codes to merchandise, the primary six digits of an HTS code are the equal of an HS code, and will be inputted. Although HS codes are vital as a service provider when importing items, they’re additionally related for the products you ship to worldwide prospects. 

If you happen to’re a service provider utilizing Shopify to promote your items on-line, the platform helps including HS codes to the products you intend to ship around the globe, with a purpose to present worldwide prospects an estimate of duties at checkout. Duties are calculated primarily based on just a few components, together with a product’s declared worth and delivery prices, the product class as decided by the HS code, the nation or area of origin, the vacation spot nation’s tariff charges, and relevant commerce treaties. 

Right here’s how one can add an HS code to your items within the Shopify admin:

  1. On the left hand menu bar, choose Merchandise after which click on on Add Product on the highest proper hand facet.
  2. Scroll all the way down to the Delivery part.
  3. Navigate down additional to the Customs Info portion of the Delivery part.
  4. Add the nation/area of origin in your product. Most often, that is the place the product is manufactured. You may additionally want so as to add the province of origin, relying on the nation. 
  5. Fill within the “HS (Harmonized System) code” area.
  6. Seek for your merchandise (e.g., “candle”) and choose the six-digit code that comes up (e.g., “3406.00”). 
  7. When you have a code longer than ten-digits, enter it manually. 
  8. Click on save.

    Notice: you can even add HS code data via the majority editor or import it with a CSV file.

    Sure shops on the Superior Shopify or Shopify Plus plans might have entry to a beta characteristic that enables them to gather responsibility and import taxes at checkout. 

    If you happen to would not have entry to this characteristic, you may obtain a third-party app from the Shopify App Retailer to indicate an estimate of the price of responsibility and import taxes for an order to your prospects at checkout. Third-party apps would possibly cost you further recurring or transaction charges.

    Learn extra about including HS codes to merchandise and duties on the Shopify Assist Middle:

    For extra data on how one can promote merchandise around the globe with Shopify, examine Shopify Markets—an commerce resolution that helps you simply promote to anybody on the net from a single retailer.

    Import into the US with ease 

    Understanding the HS and figuring out how one can classify your items with an HS code will provide help to keep away from complications on the subject of bringing your gadgets throughout the border and allow you to seamlessly broaden your retailer to a number of international locations. 

    Other than remaining compliant with laws and avoiding penalties for non-compliance, understanding the HTS and HTS codes may also positively impression what you are promoting and drive resolution making by informing the place you import from and the place you keep away from. 

    By figuring out how one can navigate the system and constructing an consciousness of a few of the commonest HS code errors, you’ll keep away from worldwide import errors and mishaps. As a substitute, you may give attention to bringing your gadgets into the USA, packaging and sending them off to prospects, and constructing what you are promoting one cargo at a time.

    HTS Codes FAQ

    Do I must adjust to the HTS?

    If you happen to’re a enterprise importing items into the US, you will have to adjust to the HTS.

    The place can I be taught extra in regards to the HTS?

    The USITC web site homes detailed details about the HTS, together with an About web page, regularly requested questions, and assist and get in touch with data. 

    The place can I discover the HTS quantity for my good?

    You will discover the HTS quantity in your good inside a particular chapter of the present HTS on-line. You can even find it utilizing the official HTS search device, although it’s vital to learn the disclaimer. If you happen to’re struggling to seek out the proper HTS code, strive utilizing Google. Nonetheless, at all times guarantee to cross-check with the official HTS, which ought to be thought of the proper reference. 

    Can I take advantage of HTS codes with Shopify?

    You can’t enter a 10-digit HTS code in Shopify. Nonetheless, you may enter the six-digit HS code (the primary six digits of the HTS code).

    Do I take advantage of the HTS for importing into Canada? 

    No, Canada doesn’t use the HTS. Canada makes use of its personal Canadian Customs Tariff system, which relies on the HS. This technique is enforced by the Canada Border Companies Company. You’ll be able to be taught extra about this on the Canadian Customs Tariff web site. 

    Can I take advantage of HTS codes for exporting items exterior of the US? 

    Whereas many gadgets share the identical HTS code and Schedule B code, there are exceptions, which will be discovered within the Discover To Exporters (PDF obtain) part of the HTS. Default to utilizing Schedule B codes for exporting gadgets exterior of the US. 

    What occurs if I take advantage of the wrong HTS code?

    You could be topic to delays, heightened inspections, charges, penalties, or seizures that might impression what you are promoting. 

    Disclaimer: This content material offers basic data to retailers who import items via US Customs  and is for informational functions solely. You’re accountable for reviewing and utilizing this data appropriately. This content material doesn’t include and isn’t meant to offer authorized recommendation. It’s best to seek the advice of your individual authorized counsel to find out how the legal guidelines in your area and the area wherein you import items would possibly have an effect on what you are promoting. To promote merchandise utilizing the Shopify platform, you will need to adjust to the legal guidelines of the jurisdiction of what you are promoting and your prospects, the Shopify Phrases of Service, the Shopify Acceptable Use Coverage, and every other relevant insurance policies.


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