To a novice, the Harmonized Tariff Schedule – the document that’s the key to import duties and fees – might look impenetrable. But if you bring cargo into the US, it’s crucial to get a handle on this complex list of product descriptions, each with its own 10-digit code. The HS code for international shipping assigned to a product determines how much it will cost you to clear customs and meet other requirements.
What’s an HS code?
Administered by the World Customs Organization, the Harmonized System (HS) provides a standardized way to identify products when countries around the world assess duties and other fees.
As a general rule, the importer of record must clear customs and might have to pay duties when bringing products into a particular country. Many countries also require export customs clearance formalities before a shipment’s departure.
When you bring cargo into the US, the HS code on the import documentation tells US Customs exactly what you’re importing and, therefore, how much you need to pay.
Just to complicate things, while the Harmonized System applies around the world, the code for a specific product could vary slightly from country to country. The first six digits are usually the same, but there could be differences in the last four.
How does the HS code for international shipping impact your costs?
It defines what duties you pay
Some products are subject to duties when you bring them into the US. Others enter for free. Thanks to special tariffs and trade agreements, you might pay more in duties when you import a product from one country, and less – or nothing – when you import the same product from another. The HS code helps you and US Customs calculate how much you owe.
The HS code for international shipping also makes subtle distinctions between products that appear similar—for instance, between a product made from natural materials, synthetic materials or some combination of the two. That small difference could affect the duty.
It defines your regulatory obligations
Along with US Customs, other federal entities, known as Participating Government Agencies (PGAs), take an interest in imported products. For example, the Food and Drug Administration (FDA) regulates imports of products such as foods, pharmaceuticals, medical devices and cosmetics. The Environmental Protection Agency (EPA) regulates a broad range of products that contain potentially harmful chemicals – even innocuous-seeming products like wooden furniture, due to chemicals in adhesives.
When you import a product that’s regulated by a PGA, that involves extra paperwork, and it could involve extra fees, such as the cost of a special license. The HS code alerts US Customs and the importer when those obligations apply to a product.
An expert partner can help with HS codes and save you money on import duties and fees
As an importer of record, you are ultimately responsible for assigning the right code to any product you import. But unless you understand the Harmonized Tariff Schedule very well, it’s a good idea to work with someone else who does.
A licensed customs broker represents you in transactions with US Customs. Part of that job is to make sure your documentation provides the right product classification.
As you arrange an import, 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 Harmonized Tariff Schedule 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.
Once you provide that six-digit code, the customs broker might help you save on duties and import fees in any of several ways:
- Correctly adding the final four digits to the code so there’s no doubt about the product’s identity. This ensures that you pay exactly what you owe, and no more.
- Double-checking the code you provided, to avoid expensive surprises. If your educated guess about which code to apply turns out to be wrong, US Customs could hit you with a bill for more than you expected to pay. Customs might also point out regulatory obligations you didn’t know you had, with new fees attached. Besides triggering new costs, such a mistake could delay your shipment. When a customs broker takes charge, you owe the same duties and fees, but you’re prepared for the full cost in advance. And your shipment doesn’t get stalled in customs due to incorrect paperwork.
- Double-checking the code you provided, to avoid overpayment. Maybe you’ve chosen an incorrect HS code, and it calls for more in duties than the law requires you to pay. Will a customs agent catch that mistake and charge you the lower tariff rate? Who knows? But a good customs broker surely will, and then change the paperwork to reflect the true identity of your product.
Expert help behind the scenes
The customs broker is just one of several providers that play a role in your international shipments. Its services are invaluable. But when you work directly with a broker, that creates one more relationship to manage, and more transactions to oversee, every time you import cargo.
Luckily for shippers and importers, especially smaller ones, there’s a way to enjoy the services of a top-rate customers broker without taking on more work. The key is to rely on an experienced freight forwarder that understands the customs clearance process and also works with a dedicated customs broker.
Just as the forwarder deals with ocean carriers and trucking companies on your behalf, it also takes care of transactions with the broker. You get all the advantages in one integrated service.
To learn more about how to benefit from expert customs clearance agent services, get in touch with I.C.E. Transport.