Understanding the Harmonized Tariff Schedule
The Harmonized Tariff Schedule (HTS) is a critical tool for businesses involved in importing and exporting goods to and from the United States. Published by the U.S. International Trade Commission (USITC), the HTS serves as a guide for determining the correct classification and duty rates for imported goods. This guide explains the key aspects of the HTS in clear, simple terms to help you stay compliant and informed.
What is the HTS, and Why is it Important?
The HTS is an official document that classifies all goods imported into the United States. It contains two types of information:
Legal Provisions: These are legally binding rules and regulations that have been enacted or proclaimed by law.
Non-Legal Provisions: These are statistical or reference-based details designed to provide additional information but have no legal authority.
When goods arrive at U.S. ports, they must be classified according to the HTS. This classification determines the duties (or tariffs) that apply, as well as compliance with regulations enforced by U.S. Customs and Border Protection (CBP).
Who is Responsible for Classification?
Importers: Importers are responsible for classifying your goods accurately under the HTS.
CBP: Customs officials are responsible for interpreting the HTS to ensure goods are classified correctly and duties are assessed accurately.
For Exporters:
Most goods being exported from the United States can also be classified under the HTS. However, some goods specified in the Notice to Exporters must use the Schedule B classification system, which is managed by the U.S. Census Bureau.
How the HTS is Organized
The HTS follows a standardized global system known as the Harmonized System (HS), which is maintained by the World Customs Organization (WCO). This system uses a hierarchical structure to describe goods:
4-digit headings: Broad categories of products
6-digit subheadings: More detailed classifications
8-digit U.S. subheadings: Specific to the United States, indicating duty rates
10-digit statistical codes: For detailed tracking of trade data
Example Classifications:
Cotton Sewing Thread for Retail:
HTS Code: 5204.20.00
Duty Rate: 4.4%
Copper Cathodes:
HTS Code: 7403.11.00
Duty Rate: 1%
Legal Authority of the HTS
Under Section 1204(c) of the Trade Act, the legal provisions of the HTS are considered statutory, meaning they have the force of law. The HTS is updated regularly to reflect changes in international trade rules and agreements.
Key Resources for Businesses:
• HTS Search Tool: Helps you look up classifications quickly.
• USITC DataWeb: Offers trade data and classification assistance.
Tip: While these tools are helpful, always refer to the official HTS for the final legal classification of your goods.
How to Classify Your Goods
Review the General Rules of Interpretation (GRIs): These rules guide you through the classification process.
Compare Headings and Subheadings: Identify the most appropriate category for your goods.
Use Hierarchy: Start with broad 4-digit headings and narrow down to 6-, 8-, or 10-digit codes.
Note: Classification can vary slightly between countries due to national laws or customs rulings. Always ensure your goods are classified according to U.S. regulations.
Non-Legal Elements in the HTS
Some parts of the HTS are provided for informational purposes only:
Footnotes: These offer clarifications or references to other HTS provisions but are not legally binding.
Statistical Codes: These codes help track trade data and are created by an interagency committee.
Staying Up-to-Date with HTS Changes
The HTS is updated periodically:
Basic Editions: Published annually to reflect major legal changes or staged duty reductions.
Online Revisions: Available on the USITC website (www.usitc.gov) and updated as changes occur.
Printed Supplements: Issued for large-scale changes affecting multiple chapters.
Important: Each revision’s change record lists the specific legal or statistical changes made. Always check for the latest updates to ensure compliance.
HTS and Free Trade Agreements (FTAs)
The HTS also reflects rules of origin for goods eligible for preferential treatment under FTAs, such as the United States-Mexico-Canada Agreement (USMCA). These rules are updated alongside changes to the HS. If you are unsure whether your goods qualify under an FTA, consult CBP officials for clarification.
Why the HTS Matters for Your Business
Accurate classification of goods under the HTS is essential for:
Determining Duties: Ensuring you pay the correct tariffs.
Compliance: Avoiding penalties for incorrect classifications.
Trade Data: Keeping track of imports and exports for business analysis.
Eligibility for Preferences: Benefiting from reduced or zero-duty rates under trade agreements.
Summary
The Harmonized Tariff Schedule (HTS) is a vital resource for importers and exporters. By understanding the structure, legal authority, and classification process of the HTS, you can ensure your business remains compliant, efficient, and competitive in global trade.
For more information and the latest updates, visit the U.S. International Trade Commission (USITC) website: www.usitc.gov.
This article is designed to help you navigate the HTS with confidence. If you have questions or need assistance, feel free to contact us at Platton – we’re here to support your business needs.