In our era of globalization, goods and materials are crossing borders constantly. The Harmonized Commodity Description and Coding System – commonly known as the Harmonized System (HS) – is like a universal language that ensures everyone understands what products are being traded, no matter where they come from or where they're going.
When your products enter a new country, customs officials need to know what's inside the shipment, how much it's worth, and whether any rules or taxes apply to it. The HS code provides a standardized way to describe products, making customs clearance faster and more efficient.
HS code changes are made every five years by the World Customs Organization, but countries are free to introduce national distinctions for tariffs and other purposes at any time. So it’s wise to check your codes on a regular basis.
The WCO’s HS code changes and updates are meant to simplify cross-border trade all over the world. They want to have the same rules for labeling products in every country. But here's the tricky part: even with these updates, different countries can still use slightly different codes for the same thing.
HS codes are six digits long, and they give you a general idea of what a product is. For example, a smartphone might have a six-digit code that says it's an electronic device.
Then, countries can add extra digits, making it a 10-digit code. These extra digits give trade officials more specific information, and they’re often where confusion can come in – especially when you compare the 10-digit codes between countries like the US and Europe. They might be talking about the same smartphone, but the extra four digits can make it seem like they're different things.
Or, say you’re shipping a sofa overseas. In the US, a standard sofa typically falls under HS code 9401.61.6011. But in the EU, it has a slightly different code: 9401.61.00.
This can cause problems when you want to send the sofa from the US to Europe, or the other way around. If you use the wrong one, it could mean delays with Customs and delivery.
An expert customs broker can help you understand these codes and advise the right one for your shipment.
HTS codes are amended far more frequently than global HS codes. In fact, the US International Trade Commission has published 11 HTS revisions so far this year – with each revision containing dozens or hundreds of HS code changes.
You are ultimately responsible for assigning the right code to any product you import. But unless you understand the coding system very well, it’s a good idea to work with a licensed customs broker who does.
When you arrange a shipment, you give your customs broker – or a freight forwarder that works closely with a broker – as much information as you can about the product. That includes the first six digits of the HS code. (Ideally, you’ll get that number from the company that supplies the product. Or you might try to figure it out yourself, using a tool such as the US government’s HTS search.)
You need to include this information on a document called the Importer Security Filing (ISF), which your broker transmits to US authorities before your product leaves the port of origin.
The customs broker might help you save on duties and import fees in several ways:
Read more: Understanding Customs Brokerage Services
The reference documents for HS codes are all free and readily available. But they don’t always provide the exact right answer. Sometimes it’s wise to work with a freight forwarder that provides customs brokerage as part of a single, integrated global transportation service. Contact the experts at I.C.E. Transport to start a discussion.