HS and HTS Codes are essential in international trading. The HS Code stands for Harmonized System Code, and the HTS Code stands for Harmonized Tariff Schedule Code.

The World Customs Organization (WCO) created both codes to define and classify traded goods worldwide. When you want to import or export a product internationally, you must use an HTS Code that matches the Harmonized Tariff Schedule of the country where the goods are going.

The main difference between HS and HTS codes is the number of digits. An HS Code is a universal standard with six digits. On the other hand, an HTS Code has 7-10 digits and is often unique after the sixth digit, depending on the country of import.

Harmonized System Code (HS Code)

The Harmonized System Code, or 'HS Code,' is a six-digit code used worldwide to classify goods for customs. Customs officers use HS Codes to identify traded products and set the proper duty and tax rates, which helps move goods across borders smoothly.

The Harmonized System organizes about 5,000 commodity groups into 99 chapters, which are grouped into 21 sections. The six-digit HS Code has three parts:

• Chapter: The first two digits show the chapter and give a rough idea of the product. There are 99 chapters. For example, chapter 85 stands for 'Electrical machinery.'
• Heading: The next two digits show the heading, which narrows down the category within the chapter. For example, heading '01' means 'Electric motors and generators.'
• Subheading: The last two digits show the subheading, further specifying the product. For example, subheading '10' refers to 'Electric motors of an output not exceeding 37.5 watts.'

Additional two to four digits are allowed to be added by countries after the six digits of the HS code, called Harmonized Tariff Schedule (HTS) Codes. It is done to break down the classification further.

Harmonized Tariff Schedule (HTS code)

The Harmonized Tariff Schedule (HTS) is a system used to classify goods for import. It helps customs officials and importers know what kind of products are being brought into the country and how much tax, or duty, should be paid.

The HTS system is based on the product's name, what it's made of, and how it's used. Each product gets a unique HTS Code, which has 10 digits. The first six digits come from the international HS Code, which is the same worldwide. The last four digits are added for specific details of the product.

US Customs uses these HTS Codes to classify imported goods. This classification helps determine how much duty, or tax, you need to pay when you bring goods into the US. The HTS system makes it easier for importers to know their shipments' exact tariff and duty rates. This way, they can plan better and avoid surprises.

The HTS system is important because it helps keep track of all the different products coming into the country. It also ensures that everyone pays the right amount of taxes on their imports, which helps fund various government services.

Schedule B Code versus HTS Code

A Schedule B number is a 10-digit code that classifies goods for export. The first six digits of a Schedule B number are the same as the HS Code used worldwide.

The HTS Code is also a 10-digit code, and the first six digits are the same HS Code as the Schedule B number. However, there are some key differences between the two:

1. Purpose: Schedule B Codes are used for exporting goods from the US, while HTS Codes are used for importing goods into the US.
2. Number of Codes: There are about 19,000 HTS Codes and only about 9,000 Schedule B Codes.

To find the right Schedule B Code for your products, you can use a free online search tool provided by the US Census Bureau.

Is the HS Code the same for all countries?

The HS Code is a universal system used to classify goods for trade. More than 200 countries use this system to classify over 98% of traded merchandise. The basic HS Code is six digits long and is the same in almost every country worldwide.

However, countries can add extra digits to the HS Code for more detailed classification. They usually add two or four more digits to the original six-digit HS Code. These extra digits help each country with its statistics and tariffs (taxes on goods).

So, while the first six digits of the HS Code are the same everywhere, the extra digits can differ depending on the country. This way, the HS Code system stays universal, but countries can still have specific details for their needs.

Why is an HS Code important?

HS Codes are very important in international trade for several reasons:

1. Determining Tariffs: HS Codes help set the correct tax, or duty, rate on traded products. This means you know how much you must pay when importing or exporting goods.
2. Keeping Records: Governments use HS Codes to keep track of international trade. This helps them gather statistics and analyze trade for economic, legal, or trade negotiation purposes.
3. Saving Time and Money: Using HS Codes correctly saves business owners and companies time and money. It makes the trading process smoother and helps avoid mistakes.
4. Legal Responsibilities: Using the correct HS Codes fulfills your legal responsibilities in international trade. Incorrect or missing HS Codes can lead to legal problems and bad business practices.

If HS Codes are not used correctly or not used at all, several issues can arise:

• Costly Effects on Duty Rates: Providing the wrong HS Code or not providing one can be risky. It might affect your duty rate, causing you to pay more or face penalties.
• Risk of Delays: Incorrectly classified shipments can cause delays and storage charges. Customs brokers need the right HS Codes to process goods efficiently.
• Overpaying or Underpaying: If you use the wrong HS Code, you might pay too much duty or not enough. You won't get a refund if you overpay because it's your mistake. If you underpay, customs will make you pay the difference and possibly fines.

How to find and check an HS code?

Finding the correct HS Code for your product is essential for international trade. Here's how you can do it:

1. Look for an HS Code List: Find a list of HS Codes. Many websites including Getatoz provide these lists; a quick online search can help you find a reliable source. Remember, the first six digits of the HS Code are the same worldwide.
2. Find the Right Description: Once you have a trusted website, look for a description that matches your product. Sometimes, you might not find an exact match. In that case, you can choose the 'other' option that best fits your product.
3. Check the Import Duty: After finding your HS Code, you can see what import duty will be applied to your product. This information helps you know how much tax you will need to pay.

How do you use your HS Code?

Your HS Code can be used to set up a classification process that will illustrate reasonable care and efficiency and ensure that the lowest possible duty rate is used. The below steps may be helpful in taking the first step toward achieving this:

1. Break down the universe of your item: Breaking down the universe into specific product groupings is the first step, which is very important to ensure control and efficiency for maintaining the integrity of the data.
2. Do your research: The rulings always need to be checked, such as whether the product you have been selling locally for years or you are looking to source a new one globally.
3. Identify product specifications: You should be able to find all the relevant information required to assign the best possible classification for your product when you have a starting point in the world of HS Code. Any product specifications can now be requested from your supplier.

To summarize, understanding and correctly using HS and HTS codes are crucial in international trading. They streamline the customs process, help determine the correct tariffs, and ensure legal compliance, ultimately saving time and money. By breaking down your products into specific groups and researching the proper classifications, you can ensure the efficiency and accuracy of your trading operations.