The-Ultimate-Guide-To-Understanding-HTS-Codes

The Ultimate Guide To Understanding HTS Codes

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In the industries of export and import, preparation plays a crucial role as it helps in ensuring that all goods reach their appropriate destination without any complications. So, for such a seamless operation it is essential to have a well-versed preparation process of Harmonized Tariff Schedule (HTS) codes. Hence, this situation makes the importers and exporters understand what HTS code is, its working process,  and their implications. Therefore, read the following blog from Sunstream which serves as the ultimate guide to understanding HTS codes.

HTS Codes – An Overview

The Harmonized Tariff Schedule, or HTS is a type of numerical coding which is explicitly used by the U.S. Customs and Border Protection (CBP) to ensure the goodness of the product and to classify them. So, this coding system was implemented in 1988 by the International Convention on the Harmonized Commodity Description and Coding System for tariff classification, customs clearance, and trade compliance. These codes serve as one of the major tools for assessing the goods for international trade which includes entry summaries, duty payments, and post-entry activities like drawback claims or protests.

The HTS code is a 10 digit number which is used to classify and identify the imported products. These codes are used effectively in determining how much the taxes or duty is needed to be paid for the country while importing. Also, every product has a different HTS code which means the tariffs for each goods can be calculated accurately when they are being imported. In the USA, the HTS code is administered by the International Trade Commission and enacted by Customs and Border Protection (CBP).

In addition, the HTS code categorizes the imported goods based on the good’s functionality, composition, and name. The website of the United States International Trade Commission offers the latest version of the HTS which classifies all the imported goods type accurately. Also, to ensure that importers understand better about tariff rates and goods classification, this website also offers General Rules of Interpretation (GRIs), General Statistical Notes, General Notes, and detailed guidelines. 

How Does The HTS Code Work?

It is essential for every importer to understand and have familiarity with the HTS codes to safeguard your business from the further consequences and keep operating your business smoothly.  The HTS code includes 10 digits in the USA where the first six digits align with the Harmonized System (HS) used internationally. The final four digits indicate the country-specific classifications. So, when the goods are imported or exported, firstly the businesses declare the right HTS codes to the customs authorities. Hence, with this step the goods are ensured with accurate duty assessments, compliance, and seamless clearance of costumes. Also, the misclarification can also be avoided as it results in penalties, additional costs, and delays. 

The HTS codes also help the government to track the trade data, implement the trade agreements, and regulate the restricted goods.  They are essential for businesses across industries, from manufacturing and pharmaceuticals to agriculture and electronics, ensuring fair and efficient global trade practices.

The Harmonized Tariff Schedule also contains the Rates of Duty which explains how much is the duty or the tariff is expected to be paid for the country based on the quantity listed on the Unit of Quantity column. The Rates of Duty includes three sub-columns where the

  • Column 1 gives the information on the goods that are imported from the countries to maintain the trade relations with the United States.
  • Column 1 (Special) shows the listed items that are offered with special tariffs such as generalized system of preferences or free trade agreements.
  • Column 2 is specially designated for the imports from the countries that does not have normal trade relations with the United States (North Korea and Cuba)

Why HTS Code Is Important?

An HTS code is important for an importer and exporter as it offers you the understanding of the duties that should be paid for the county before starting the import process. It also enables the businesses to build on realistic budgets which can effectively predict the potential customs rate changes as it can affect your business from further processing. In addition, these codes help in streamlining the various operations with the present internal system for quick tracking and management of the imports. 

The Harmonized Tariff Schedule (HTS) became effective as a system for classifying goods for duty, quota, and statistical purposes. The HTS is derived from the HS, but it is unique to the United States and can be called the Harmonized Tariff Schedule of the United States (HTSUS).

Sunstream helps the business with the accurate HTS code classification ensuring that goods are compliant with trade regulations. Partnering with us ensures accurate product classification, seamless customs clearance, and reduced risks of penalties.