Customs 101: Harmonized Tariff Schedule (HTS)

What is the Harmonized Tariff Schedule?

The Harmonized Tariff Schedule (HTS) is a system to classify traded goods based on their material composition, product name, and/or intended function. An important function of the HTS is to determine the rate of duty applied to an imported good.

Although the Office of Tariff Affairs and Trade Agreements (USITC) maintains and publishes the HTSA in its various forms, Customs and Border Protection is the only agency that can provide legally binding advice or rulings on the classification of imports.

Additionally, U.S. Customs and Border Protection (CBP) uses this system and its rules to classify imported goods.

What do the numbers mean?

To provide structure, the HTS is designed so that each commodity falls into only one category.

It is divided into chapters, each of which has a 2-digit number. Each product category within the various chapters contains 4, 6, 8, or 10 digits. The 4-digit categories are “headings: while the 6-, 8- and 10-digit classifications are “subheadings.”

Nearly every good that is being imported into the United States is classified in a 10-digit category.

Fortunately, the 10-digit classification of goods along with its corresponding duty rates are made available at the Official Tariff Schedule Guide. You may read the rest of this article while using the search functionality of the HTS.

For example, the 10-digit classification for “Fresh cut, sweetheart roses” imported into the United States is HTS# 0603.11.0010. Remember that HTS is a tool to determine the rate of duty, in this case, it is 6.8%.

Note: “Duty” is often used interchangeably with the word “tariff.”

As another example, the 10-digit classification for “copper cathodes” is HTS# 7403.11.0000. In this case, the duty rate is 1%.

There are thousands of these 10-digit subheadings covering goods in the HTS. You may use the search functionality of the HTS website to obtain the right classification.

As an importer, it is your responsibility to establish an verify the correct HTS classifications used on import entries and/or ISF security filings. (Related: Import Logistics Custom Terms).

For this reason, it is important to establish that accurate information about your products is reported to CBP. It is the importer’s sole responsibility to supply correct information about the imported goods so that a customs expert may determine the proper classifications of those goods.

Do note that the following factors can affect the amount due:

  1. Classification
  2. Valuation
  3. Free Trade Agreements
  4. Special Duty Rates

The World Customs Organization Harmonized System and Foreign Tariff Schedules

The HTS includes the nomenclature structure of the Harmonized Commodity Description and Coding System, otherwise called the Harmonized System (HS).

The World Customs Organization (WCO) administers the system. It is important to realize that WCO committees consist of member country representatives that work to keep the system up-to-date and make decisions about classification questions by governments.

The guiding concept of the Harmonized System is to use a common set of descriptive categories for goods in trade and to allow these categories to be further subdivided in the tariff schedules of WCO member countries for more detailed duty or statistical purposes

Recap

As a recap, you’ve learned some important aspects of the Harmonized Tariff Schedule such as:

  • The Harmonized Tariff Schedule is a system for classifying traded goods based on their product name, material composition, and/or intended function.
  • One function of the HTS is to determine the rate of duty
  • The USITC, specifically the Office of Tariff Affairs and Trade Agreements (TATA), maintains the HTS as mandated by Congress.
  • As an international trade participant, you will use the HTS in many of your daily activities such as reports, requests from Congress, and trade investigations.
  • Each commodity has a specific 10-digit tariff number of “classification”
  • WCO administers the HS.
  • USITC maintains the HTS.
  • CBP classifies goods by the HTS.

Questions about how to classify your goods?  Gallagher Transport can help. With over 25 years as an import broker, freight forwarder, and logistics supplier, Gallagher Transport has extensive experience working with importers and dealing with all commodities.  We strive to make this critical piece of your supply chain go as smoothly and seamlessly as possible.

Call 303-365-1000 or email us anytime.

2018-08-13T16:17:56+00:00September 6th, 2018|Commercial Trade, Customs 101, Household Goods|