What is an HTS Code? Where do I find an HTS Code? What is a Free Trade Agreement? Some of the most common questions that can be answered by accessing the Harmonized Tariff Schedule of the United States (the HTSUS)!
If you are importing goods into the United States, you should be familiar with both the Harmonized Tariff Schedule and 19 CFR. These two references will help you understand the rules and regulations that govern importing into the United States.
What is the Harmonized Tariff Schedule of the United States?
The Harmonized Tariff Schedule of the United States (HTSUS) is a reference manual of tariff codes based on the Harmonized System. The HTSUS provides the HTS codes, tariff rates, statistical categories, and any applicable Free Trade Agreements to virtually any item that exists.
To put it simply: It is a really big book with a bunch of HTS codes and all the rules that go along with them. Thankfully, there is a digital version.
The HTSUS is broken down into several parts:
- General Rules of Interpretation – This is where you find the principles that govern the classification of goods
- General Notes – This is where you find more information on Free Trade Agreements
- Chapters – This is where you find the HTS codes, Duty Rates, and Statistical Reporting Categories
- Appendixes – This is where you find information regarding Chemicals, Pharmaceuticals, and Dyes
- Statistical Annexes – This is where you find the Statistical Codes to use
To make finding HTS Codes and General Notes easier, you can access the HTSUS chapter-by-chapter view.
Access the digital version of the HTSUS, and click “View.”
Now you have access to the Harmonized Tariff Schedule of the United States in a chapter-by-chapter view. As you can see, the tariff is broken down into several parts including 22 Sections with 99 Chapters of HTS Codes.
What is the Harmonized System and how is it different from the HTSUS?
The Harmonized System is an internationally standardized system of names and numbers to classify traded products maintained by the World Customs Organization. There are currently 180 member countries that use the Harmonized System.
The HTSUS is based on the Harmonized System and is the source of HTS numbers to classify products in the United States. Basically, the HTSUS is the US version of the Harmonized System.
What is an HTS Code and how is it different from an HS Code?
An HTS code is a specific code used to classify and define an item entering into the United States. This code lets US CBP know how much duty to collect, any statistical information that is needed, or if additional information is required from the Importer by a partner agency (such as the FDA or EPA).
An HTS Code is a US specific HS Code. The first six digits are internationally agreed on and universal and are what is known as the Harmonized System (HS) Code. The last four digits are specific to the United States and give us the Harmonized Tariff Schedule (HTS) Code. Below is an example HTS Code for Bicycle Helmets:
HTS Code for Bicycle Helmets: 6506.10.3045
1. The first 2 digits (65) are the Chapter digits.
2. The next 2 digits added (6506) are the Heading digits.
3. The next 2 digits after that (6506.10) are the Sub-Heading digits.
The 6 digit code is the Harmonized System (HS) Code. The HS Code is the same for a product in every country. The final 4 digits are country specific. In the United States, this full, completed 10 digit code is the HTS Code.
4. The next 2 digits (6506.10.30) are the Tariff Digits. These two digits determine the rate of duty (how much money is owed to Customs).
5. The final 2 digits (6505.10.30.45) are the Statistical Digits. These final two digits determine what statistical information needs to be collected from the importer.
Why do I need an HTS Code?
When you import goods into the United States, you or a Customs Broker will have to file an Entry with US CBP. Part of filing this entry is presenting the commercial documents associated with the shipment being imported such as a commercial invoice. Each item on the commercial invoice needs to have a corresponding HTS Code so CBP can know what the item is and how much duty to collect from the Importer.
The HTS Code also lets CBP know if any additional information is required from the importer for a partner agency. Certain HTS Codes will be flagged for a possible Fish and Wildlife Service entry, Food and Drug Administration declaration, or an Environmental Protection Agency declaration.
How do I find an HTS Code for my product?
Importers bringing goods into the United States should know the HTS code for each product they are importing. Searching through the HTSUS can be a daunting task but the digital version of the tariff has a search feature that might make the process easier. Most manufacturers and shippers will be able to provide you with the first 6 digit HS code, making it easier for you to find the remaining 4 digits for the HTSUS code.
Hiring a Licensed Customs Broker will also help in this area.
You can also use the three Pro-Tips below to help you find the right HTS Code for your product. Using the correct HTS code for your product is an important part of compliance and will ensure the correct amount of duties are paid to CBP.
Pro-Tip: Use the Customs Rulings Online Search System (CROSS)
Customs CROSS is a database of Customs Rulings on items that have been imported into the United States. To get a good idea of what HTS Code to use for your product, simply enter in the type of product you are importing into the Customs Cross search bar. You now have access to a database showing how Customs has ruled on goods that have been imported before. The HTS codes provided in these rulings will either give you the exact HTS code to use for your product or provide you with an idea on which chapter of the HTSUS you should be searching in.
Pro-Tip BONUS: Contacting the Centers of Excellence and Expertise
Centers of Excellence and Expertise are offices staffed by CBP personnel whom specialize in specific industries. These offices are where CBP has chosen to consolidate the knowledge-base and trade compliance issues of goods based on key industries. You may contact these centers via email or telephone to speak with an Import Specialist that can help you with classification (HTS Code) and admissibility questions.
Pursuant to 19 CFR Part 177, an importer can also request a binding ruling from customs. This provides a definitive, legal ruling on how to classify the product.
Remember to Read the General Rules of Interpretation
The General Rules of Interpretation (GRIs) can be found in the electronic HTSUS chapter-by-chapter view. The GRIs are the principles that govern the tariff classifications in the HTSUS. In other words, these are the rules you have to follow, starting from GRI 1 through GRI 6, when it comes to Tariff Classifications.
Be Sure to Read the Chapter Notes!
Each Chapter in the Harmonized Tariff Schedule has its own Chapter Notes. These notes are detailed rules and regulations on the limits and scope of the HTS Chapter. They will provide you with further guidance on how to correctly classify your products.
Click on the “Chapter” tab to access the Chapter Notes for this specific Chapter.
Read the specific notes on this Chapter and see if they apply to your HTS Code.
How do I find the Duty Rate for My Product? Does my product qualify for a Free Trade Agreement?
The duty rate for the item being imported into the United States can be found right next to the HTS Code in the HTSUS. There are several columns that indicate which duty rate should be applied based on the country of origin of the goods.
Column 1 has the duty rates for items coming from countries that the United States has “Normal Trade Relations” with. Most countries fall under Column 1. Under Column 1, there are “General” and “Special” columns. The “Special” column indicates there might be a special duty rate for items from specific countries or scenarios. If there is a Free Trade Agreement associated with this product, the special duty rate will be under the “Special” column.
Column 2 countries are countries that the United States does not have “Normal Trade Relations” with. The only two countries under Column 2 as of now are North Korea and Cuba.
A Word of Encouragement
If you are having a difficult time navigating through the HTSUS or 19 CFR, don’t be discouraged. It takes practice and time to familiarize yourself with these dense (and some would say, dry) materials. A great way to learn how to navigate through both the regulations and the tariff is to study to become a Licensed Customs Broker. Whether you are looking to become a broker or not, studying for the exam will help you get a better understanding of the rules and regs.