If you’ve ever dabbled in international trade, you’ve probably come across the term “HS tariff code.” These codes are the backbone of your customs clearance process. Duty rates, tariff reductions, anti-dumping orders, additional duties, government agency requirements, and much more depend on this 6-digit code.
When you’re unfamiliar with the HS code of your shipping products, it can feel like decoding a secret language. But don’t worry, check this article to learn how to find the HS tariff code.
What is the HS Code in shipping?
Before we dive into how to find your code, you may want to know what is an HS tariff code exactly. HS stands for Harmonized System, a globally recognized system developed by the World Customs Organization (WCO).
It all started in 1983 when the HS convention was signed. Now, it has over 205 member countries. By signing, these countries agreed to organize their HS tariff codes and duty structures based on the HS Code categories.
The Harmonized System employs six-digit codes to classify international trade commodities into 21 sections, 96 chapters, over 1,000 headings, and more than 5,000 sub-headings.
The main purpose of this code is to classify goods in international trade. Each code corresponds to a specific product and helps customs authorities determine the appropriate taxes, duties, and regulations that apply to that product.
Watch the Video to Learn the Function of HS Codes
Why do you need an accurate HS code?
So you know what HS code is, then why does it matter? Customs officials use the HS code to determine if your shipment is allowed, how much duty to charge, and whether it needs any special permits. And of course, what taxes and tariffs your goods are liable for depends on the numeric code.
The equation is to enter your HS code on the HS codes lookup tool and get to know how much you have to pay as product tax. If you use an inaccurate HS code, custom authorities might interpret it differently and you might end up paying a higher or lower tariff. You are at a loss in either case; you might face penalties in case of underpayment or pay extra, hurting your overall shipment budget.
In addition, if you’re trading within a free trade area (FTA) and want to benefit from reduced or zero tariffs, the right HS code can be of great help. The reason is that a product needs to meet specific rules of origin to qualify as tariff-free.
HS codes help track these changes by classifying products and their components. Even if the inputs are from outside the FTA, the final product can still qualify for tariff benefits if it is classified under a new HS code after production.
Step-by-step guide to finding your HS tariff code
Now that you know how important it is to find the HS code of your product, let’s look at how to find the HS tariff code. This might seem a daunting task at first glance as these numbers might scare you, but honestly, it’s really a straightforward process.
Understand what you’re shipping
The first step is to know exactly what your product is. This might sound obvious, but the more specific you can be, the easier it will be to classify it. Consider the following questions:
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What is the material of the product?
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What is the function or purpose of the item?
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Is it raw, partially processed, or a finished product?
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Is it a composite of multiple materials or parts?
For example, if you’re shipping leather shoes, you’ll need to distinguish between men’s and women’s shoes, as they may have different HS codes. Similarly, shoes made from synthetic materials would fall under a different classification than leather shoes.
Use an HS code lookup tool
One of the easiest ways to find your HS tariff codes is to use an online lookup tool. Many countries provide searchable databases where you can input the name or description of your product and find the corresponding HS code.
Here are some popular HS tariff code lookup tools:
World Customs Organization (WCO) HS database
This is the most comprehensive source, as the WCO is responsible for the creation and maintenance of HS codes. However, you’ll need to sign up for an account to access it.
Trade tariff lookup
Many countries, including the U.S., UK, and EU, offer their own trade tariff lookup tools. For example, the UK offers a free tool where you can search for the HS code by entering a description of your product.
Global HS code directory
Several websites compile databases of HS codes globally. All you need is to search by product name, description, or country of export/import.
Step 3: Check your country’s HS code website
Though these lookup tools are really easy to use, there might be one problem. In many cases, countries add extra digits to the HS code (the first six digits are universal) for a more specific classification. So, it’s a good idea to consult your local customs authority.
To do so, head to your country’s HS code classification website. You already know your product’s details; now, use that information to determine all the possible categories it could fall under.
However, finding the exact code is not that simple. For example, if you’re selling a kitchen knife, you might search for “knife” and find it under section 8211. But if your knife has a ceramic blade, it wouldn’t fit in that section because Chapter 82 specifically excludes ceramic blades. Instead, your knife would be classified under Chapter 69, which covers ceramic products.
Step 4: Research Competitors
Another compelling option is to peek into the competitors. If they are making exactly the same products, you can save time by seeing what HS codes they’re using. If their product has the same application, materials, and characteristics, you might be able to use the same HS tariff code.
For international competition, though, you can not just copy-paste. But still, you can see how their product is categorized and compare it with the same chapter and subchapter in your country. This can help narrow down the possible codes for your product.
Step 5: Use the General Rules of Interpretation (GRI)
Once you’ve got a few possible codes on your HS code list, use the General Rules of Interpretation (GRI) to nail down the right one. The GRI includes six rules that help guide you through the classification process:
GRI Rule 1: Start by checking the headings and notes of the relevant section or chapter. This will help you zero in on the right HS code.
GRI Rule 2: If Rule 1 doesn’t work, move to the next lower classification level until you find the correct code.
GRI Rule 3: If your product fits multiple sections or chapters, pick the most appropriate heading.
GRI Rule 4: When two or more headings apply, go with the one that provides the most specific description.
GRI Rule 5: If your product is a part or accessory of another product, classify it under the same heading unless it clearly belongs in a different category.
GRI Rule 6: If no heading fits your product exactly, choose the one that most closely resembles it and select the subheading based on its key characteristics.
Step 6: Get binding tariff information (optional)
Following these steps, you will finally get the number you are looking for. But, it’s a must-have to confirm your research because customs can challenge your choice. So what should you do here?
You need to get the Binding Tariff Information (BTI) if possible. This is a legal document that your country’s customs authorities provide you with the correct HS code. So, if you are still unsure about your HS code, the good idea is to avoid disputes using BTI.
Step 7: Consult with a Customs broker or freight forwarder
Do you know what’s the easiest way to get an accurate HS traffic code? It’s your freight forwarder. These professionals are well-versed in import/export regulations and can help you correctly classify your goods.
They can take all the headaches off by guiding you throughout your shipping journey. Documentation, HS code, custom clearance: all these haunting terms might no longer haunt you if a reliable freight forwarder is beside you.
Find a freight forwarder in China
What happens if the wrong HS code is used?
A wrong HS code can be a nightmare for shippers. Simply put, you can not pass customs in the absence of the right code. Here is what you can encounter if you accidentally use the wrong HS code.
Regulatory Violations
Even if your product gets through customs once or twice with the incorrect code, continuing to use it could result in fines or even a ban on exporting to that country. Additionally, your product might be subject to quotas, and misclassification could cause big problems in the future.
Delays and Customer Frustration
An incorrect HS code can also delay your shipment until the right code is applied. This can affect not only you but also your customers. A delay might turn a satisfied customer into an unhappy one.
Higher Duties and Taxes
If the correct HS code isn’t used, customs will likely classify your product under the “Other” category. This category usually comes with the highest duty and tax rates, meaning you or your customer could end up paying a lot more than expected in extra costs.
Final Words
So this is all about finding an HS code. If you follow this step-by-step guide, you can get the correct HS code without paying extra to consult a customs office. Or, your freight forwarder like Foresmart is going to ease out your research for HS tariff codes.
FAQs
Can I change my HS tariff code later?
Yes, you can change your HS code, but it’s important to do so before shipping. If customs authorities discover a misclassification after the goods have been shipped, it could lead to delays, additional duties, or penalties.
Can a product have more than one HS code?
No, there is only one correct HS code for every product that is used in more than 200 countries worldwide.
Do HS codes expire?
Yes, HS codes are usually reviewed every five years. However, countries are free to implement their own unique tariff distinctions and other regulations whenever they want.
