How to use HTS codes when importing goods into the US

You want to import goods into the US as part of your ecommerce business. It can be daunting, as many regulations and customs procedures exist. Understanding the importance of HTS codes will help you avoid penalties and delays.

US Customs requires that businesses declare their imported goods by using these codes. Incorrect usage can lead to fees, inspections, and seizures. Do not let this happen! Find out how to easily navigate the customs process by determining the correct HTS code for your product.

This post will explain how HTS codes are used and the implications of incorrect usage, including penalties and fees levied at Customs.

What does an HTS code mean?

HTS is Harmonized Traffic Schedule. HTS codes are unique 10-digit numbers that calculate the duty or tax on imported goods from other countries.

The Department of Homeland Security, Customs and Border Protection unit enforces HTS codes.

HTS Codes: Key Terms

The many acronyms and terms used to describe the different processes can make international ecommerce a complex process. We’ve compiled a list of words and acronyms that describe global imports.

Harmonized System

The Harmonized System is a language used to code and identify goods traded internationally. It is also defined as the terminology almost all countries use for their tariffs on transportable goods and trade statistics. The latest version was introduced in the HS system in 2022.

HS Code

The six-digit code classifies imported items. The first two digits indicate the chapter, while the middle two are the heading. Finally, the last two are the sub-headings within the header.

HTS Code

The 10-digit code classifies imported items. The first six digits are an HS Code, the next two are the US Subheading for the HS Code, and the final two represent a statistical suffix.

World Customs Organization

A non-profit, intergovernmental organization that represents 183 different customs administrators worldwide. The WCO created and maintained the HS System to make uniformity in-country customs laws.

Schedule A code

Schedule B codes, maintained by the US Census Bureau based on HS codes, are 10-digit codes used to categorize exports from the United States.

An Introduction to the HTS

Most countries classify imports and determine the tariff using the HS code. The United States, however, uses the HTS. It was introduced on January 1, 1989. The HTS, unlike the previous tariff schedules, is based upon the HS.

How HTS works

The HTS classifies imports based on product characteristics such as name, function, and composition. The latest version of the HTS can be found on the USITC website. It is divided into 99 chapters and 22 sections describing various items. The beginning of each section or chapter includes notes that provide essential information.

Three chapters of the HTS serve different purposes. Chapters 98 and 99, for example, are reserved for use in the national market, while Chapter 77 is reserved only for future use.

The HTS has been categorized by chapters and headings, which comprise the code HTS for each product. The HTS contains over 10,000 codes for specific products. In Section II, Chapter 10, “Cereals” is classified, which can be helpful if you are importing cereals into the US. This chapter contains duty rates, descriptions, and HTS codes for goods like barley, oats, and rice.

HTS code structure

The HTS code comprises ten digits and can be broken into five sections. The first six digits of an HTS code are the international HS numbers. Take a look at an HTS code in more detail:

Chapter The two first digits are the chapter number in the HTS. These numbers are the same across all countries.

Heading The two numbers following indicate the chapter within the HTS. These numbers are consistent across all countries.

Subheading These two numbers classify subheadings within a chapter. They are consistent across all countries.

Subheadings (tariff rates lines): The United States has specific duty rates after the first two digits.

Statistical suffix The last two digits are statistical suffixes. These are unique to the United States and used for gathering trade data.

What are HTS codes?

HTS codes are available in the HTS PDFs for each chapter. These can be downloaded from the HTS site. You can also search the HTS Database. However, to fully utilize this database, turn off your ad-blocker.

Let’s say we want to import cinnamon. You can find the HTS code of cinnamon in Chapter 9, which has a two-digit numerical value.

All products in Chapter 9 start with the same numbers (e.g., 09). The product is further classified using a 10-digit HTS code that combines the statistical suffix and heading/subheading.

The HTS code is essential because it will tell you the tariff or duty on an imported item. Duty rates are divided into three sub-columns: Column 1 (General), Column 2 (Special), and Column 3. The HTS contains three types of duty rates: ad valorem (percentage), specific, and compound.

Let’s look at an example: the HTS code (0906.20.00.00), which is for crushed or ground Cinnamon. According to Column 1 (General), importing this item is tax-free and accessible for most countries. If the item is imported into the HTS from China, the additional duty rate is 7.5%. This is stated under heading 9903.88.15 in Chapter 99, Temporary Legislation. According to Column 2, the duty rate for this item imported from Cuba or North Korea is 11C/per kilogram.

Understanding HTS codes is crucial to increasing the profitability of your business.

The consequences of incorrect HTS code usage

Misusing HS code can impact your business. This includes penalties, delays, and increased inspections. US Customs and Border Protection published a scholarly Compliance publication that mentions some consequences. You can avoid problems with HTS codes if you do the following:

Verify that the HTS codes supplied by suppliers and forwarders are accurate to ensure correct classification.

It understands the current trade agreements and programs that could affect tariff rates on specific products. Details can be found in the General Notes section of the HTS.

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