An Importer's Guide to HTS Codes

US Customs and Border Protection (CBP) has implemented Chapter 99, which is temporary legislation that offers modifications to different HTS code headings and adds harsher restrictions on other HTS codes headings. To learn more information on Chapter 99 legislations, please visit the United States International Trade Commission's site. If you have questions about how Chapter 99 could affect you, reach out to one of our Customs Brokerage expert.

HTS Tariff Codes Can Be a Confusing Topic Among Shippers

And that’s for good reason. When you’re tasked with classifying your goods from a list of over 21,000 items, it makes sense that many importers may find this system confusing.

But the good news is – this system doesn’t have to be nearly as complex as it sounds. The concept of HTS codes itself is relatively simple to explain. And there are a few quick tips that you can use to help determine how to apply HTS codes to your US import business.

What are HTS Codes? Why Do We Need Them?

To put it simply, an HTS tariff code is a number given to a specific imported item that helps identify and classify it. HTS codes also are used by governments to determine the amount of duty or taxes that must be paid to bring that item into the country. HTS stands for “Harmonized Tariff Schedule”, which is the list of all code classifications for traded goods.

Are HTS Codes International or Unique to the United States?

While the term “HTS” itself can be used to refer to tariff schedules in a variety of countries, the United States HTS code (abbreviated HTSUS) is the set of codes unique to the US. We will be using the HTSUS code list as the basis for our examples in this article.

A Classification System

By identifying imports with standardized codes, governments (in the US, specifically the US International Trade Commission (ITC)) can make sure that the correct amount of duty is paid on those items and that there is relative fairness in trade across the board – product codes and duty amounts remain the same, regardless of the company or entity importing the items.

Duty Determination

Classifying imports using the HTS code does more than determine duty, though. HTSUS codes are also used to track products coming into the country to help keep illegal or dangerous items from crossing US borders. For example, if an import alert is issued on raw 33-count cold-water shrimp that may be contaminated with salmonella, CBP agents can use their HTS classification – 0306.16.0006 – to track down the items that may be affected and detain them for further examination to make sure they’re safe.

Whats the Difference Between a HTS Code and a HS Code?

We've discussed HTS codes – but what is an HS code? You can think of HTS codes as localized versions of HS codes. “HS” stands for “Harmonized System”, and refers to the single, universal and global classification system for most traded goods and products.

Take a look at the graphics below, using footballs as our example, for a visual breakdown of the elements that make up an item’s HS and HTSUS codes.

Graphic highlighting the Chapter portion of the HTS code

1. Chapter

Chapters are the first classification layer in the HS code and HTS code systems. There are currently 99 chapters in the international HS code list, grouped into 29 general sections like “Section 20: Miscellaneous Manufactured Articles”, where you will find Chapter 95 for “toys, games, and sports equipment”. An item’s classification chapter is indicated in the first two digits of its HS/HTS code.

Graphic highlighting the Heading portion of the HTS code

2. Heading

Chapters are further divided into headings, which help narrow down the items in the category. For example, “toys, games, and sports equipment” can be subdivided into “Articles and equipment for general physical exercise.”

Graphic highlighting the Subheading portion of the HTS code

3. HTS Code/Subheading

You can see that row three, where you find the six-digit “subheading” for classifying footballs, is the item’s global HS code. These six numbers can be pretty much universally used around the globe on a higher level to classify footballs almost anywhere you ship them.

Graphic highlighting additional Subheadings of the HTS code

4. First US Subheading: Rate Line

Moving further down, the eight-digit subheading, sometimes called a “rate line”, is unique to the US and helps CBP determine the duty you will pay on the items.

Graphic highlighting the Statistical Suffix portion of the HTS code

5. Second US Subheading: Statistical Suffix/Category

The final ten-digit “statistical suffix” or “category” is a more detailed description of the item and is used for trade data collection.

In this example, the eight- and ten-digit codes are what make this a US HTS code – these additional numbers on the code are only valid in the US. Other countries may use the same first six digits (9506.62) to classify footballs, but if those countries have their own tariff code systems, any additional numbers may be different from those we see in the US HTS code.

• Remember: HTS Codes Determine the Duty You Pay
  Using our example of footballs and the current list of US HTS Codes, there would be a big difference between reporting your pallet of footballs as 9506.62.40 (Inflatable balls – footballs and soccer balls), which can be imported duty free, and reporting it as 9506.62.80 (Inflatable balls – other), for which you would pay a 4.8% import tax.

• Other Countries Won't Recognize HTSUS Codes
  In addition, you have to be careful not to use US-only HTS codes for items you are shipping to other countries. Other countries have their own variations of HTS codes, and though they may look similar to US HTS codes, they will be different, and the number used to describe an import in the US may mean something very different in another country. For example, if you tried to ship a pallet of footballs to China, and reported them as 9506.62.4040, your shipment would be rejected because in China, the code to classify footballs is 9506.62.1000.

• It's the Importer's Duty (Pun Intended)
  The US Customs Modernization Act states that an importer is responsible for filing customs entries with accurate values and estimated duties, and it is therefore technically illegal to misclassify your goods. If you are found to be doing so you may face serious fines and penalties as a result.

What is a "Schedule B" Code?

Simply put, while HTS codes are used to classify imports, Schedule B codes are used to classify exports.

• What’s the Difference Between Schedule B Codes and HTS Codes?
  Schedule B codes are ten-digit numbers used by the US Census Bureau (rather than the ITC) to monitor US exports. An item’s Schedule B is similar to its HTS code, where the first six digits are identical to the international HS code. However, its last four digits may be different. The code lists are not identical, and HTS codes tend to be more detailed, so the HTS code list is a bit lengthier than the list of Schedule B codes.

• Are Schedule B Codes and HTS Codes Interchangeable?
  Schedule B codes are used by exporters in their paperwork and on forms. You can sometimes use HTS codes when exporting (rather than classifying items twice – once for HTS and once for Schedule B), but Schedule B codes cannot be used in place of HTS codes for items imported into the US. For more details about the differences between HTS codes and Schedule B codes, as well as explanations of when it may be appropriate to use one or the other, visit the US Census Bureau’s Foreign Trade site.

How to Determine Your HTS Code

HTS codes narrow descriptions of goods and items down to a very nuclear level. That is generally the point of using them. But that same quality that makes the HTS code greatly efficient at helping CBP classify imports can also make it very difficult and confusing for shippers to categorize their items.

Here are a few tips to get you on the right track:

On January 1, 2022, new changes to the World Customs Organization’s Harmonized System took effect, which added over 70 headings and subheadings, including new classifications for items like smart phones and 3D printers.² These changes added over 1,500 codes to its list.³

The HS code system is reviewed at least every five years, and the World Customs Organization explained that these changes were made to address new technology and world factors, including provisions for new health and safety equipment, drones and more. Thomson Reuters put together a nice summary of the changes that took place in 2022, which you can view here. And to see how the codes have changed and determine whether a new code is needed to classify your products, check out the World Customs Organization’s 2017-2022 Correlation Tables.

If the thought of trying to choose an HS or HTS code for your goods still seems overwhelming, learn how our dedicated UPS Supply Chain Solutions® Customs Brokerage professionals can help simplify the import/export process for you.

Got HTS codes down and in a hurry to book your next shipment? Visit our UPS® Forwarding Hub to get started now!

2022 Changes to the HTS FAQs

¹“A Guide to the Harmonized Tariff Schedule of the United States (Library) – Understanding GRIs.” United States International Trade Commission. https://www.usitc.gov/elearning/hts/media/2017/GRIAnalysis.pdf

²“HS Nomenclature 2022 Edition.” World Customs Organization. http://www.wcoomd.org/en/topics/nomenclature/instrument-and-tools/hs-nomenclature-2022-edition.aspx

³“Recommended Modifications to the Harmonized Tariff Schedule, 2021.” United States International Trade Commission. April 2021. https://www.usitc.gov/publications/other/pub5171.pdf