HTS Codes are an important part of the import/export shipping process to identify and classify items. Used by governments to determine the amount of duty or taxes that must be paid to bring an item into a country, HTS codes, which stands for Harmonized Tariff Schedule, lists all code classifications for traded goods.
The HTS is something that can be used to refer to tariffs from many countries, but the US has HTS codes (aka HTSUS) that are unique to them.
So how does the classification work exactly? Well, by identifying imports with standardized codes, governments can make sure the required amount of duty is paid on cargo and that there remains a fairness in trade across the board. Regardless of the company or entity importing the items, these product codes and duty amounts remain the same. But HTS also determines more than just duty. HTSUS codes are also used to keep illegal or dangerous items from crossing the US borders.
You may wonder why choosing the right HTS code matters, but remember, it determines the duty that you pay. Footballs have an HTS code of 9506.62.40. Inflatable balls, such as footballs and soccer balls, can be imported duty free, whereas “inflatable balls – other” (9506.62.80), would have you charged a 4.8% import tax. But you have to be careful when using US-only HTS codes when shipping items to another country as they may look similar to other countries but they will have different meanings. As an example, a pallet of footballs being shipped to China reported as 9506.62.4040 would be rejected, because China uses the code 9506.62.1000 to classify footballs. Make sure you are using the correct HTS codes for the country you are shipping to when you ship outside of the country.
It’s the job of the importer to fill out custom entries with accurate values and estimated duties, and therefore is technically illegal to misclassify your goods, resulting in serious fines and penalties if you do so.
On January 1, 2022, new changes to the World Customs Organization’s Harmonized System took effect, adding over 70 headings and subheadings, including new classifications for items like smart phones and 3D printers. These changes will inevitably make their way into the US HTS, which will bring over 1,500 codes added to the list.
If trying to choose an HTS code for your goods still seems overwhelming, learn how Sobel can help simplify the import/export process for you. We can help you with classification in 2022, and help you navigate the upcoming tariff changes. For more information, contact your Sobel representative today.
