We have been serving to folks accurately classify their items with Delivery Options for many years and whereas it’s not incorrect to make use of these phrases interchangeably in informal dialog, it is very important perceive the variations—if not, you can get into hassle, and your cargo may, too!
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Listed here are definitions of the phrases and examples of use instances when it’s acceptable to make use of every time period:
What’s a Harmonized System (HS) Code?
The Harmonized System classification is a six-digit commonplace, known as a subheading, for classifying globally traded merchandise. HS codes, additionally known as HS numbers, are utilized by customs authorities around the globe to establish the obligation and tax charges for particular sorts of merchandise. You may study extra about these codes in our complete useful resource for all exporters—Classifying Your Merchandise for Worldwide Commerce.
- HS codes are administered by the World Customs Group. HS codes are acknowledged in 98% of world commerce.
- There are six digits in an HS code. You employ an HS code as a result of it’s a common classification device. Many governments add further digits to the HS quantity to additional distinguish merchandise in sure classes. These further digits are sometimes totally different in each nation.
- HS codes are utilized in most worldwide export documentation and business invoices.
Use Case: You’ll use an HS quantity when you’re referencing the classification along with your clients, distributors and anybody exterior of the U.S.
While you’re finishing export documentation, any paperwork which are used internationally, such because the business bill, ought to show the six-digit HS code as a substitute of an extended code. Should you use a 10-digit code, the numbers is probably not correct for the nation of import.
Instance: Harmonized System Codes
Chapter 66 of the Harmonized System consists of the next merchandise: “Umbrellas, solar umbrellas, walking-sticks, seat-sticks, whips, riding-crops and components thereof.” If your organization is importing or exporting “umbrella frames, together with frames mounted on shafts (sticks),” as outlined by the World Customs Group, the right six-digit HS quantity is 6603.20. That’s the quantity you’ll wish to use in your worldwide paperwork, as a result of the final 4 digits of the 10-digit quantity could also be totally different in each nation.
What’s a Harmonized Tariff Code?
The Harmonized Tariff Schedule of the USA (HTSUS) is a 10-digit import classification system that’s particular to the USA. HTS codes, additionally known as HTS numbers or HTSUS codes, are administered by the U.S. Worldwide Commerce Fee (ITC). It’s crucial that each one U.S. importers know and use the right HTSUS codes as a result of commodity duties are assessed primarily based on this classification. An HTS code takes the identical kind as an HS code for the primary six digits after which has 4 differing final digits.
Use Case: In case you are a U.S. importer, that is the code you have to use. The excellent classification listing is on the market at no cost on the ITC web site.
Instance: Harmonized Tariff Codes
Let’s look once more on the instance for umbrella frames. In accordance with the HTSUS, the right classification “For hand-held umbrellas mainly used for cover in opposition to rain” is 6603.20.3000 or 6603.20.9000 for all different umbrella frames. That designation is essential. The umbrella frames with the primary HTS code can enter the U.S. duty-free; the umbrella frames for the latter have a 12% common obligation fee.
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International and U.S. HS codes have 4 parts, that are recognized by the inexperienced numerals beneath the digits:
1. Chapter: On this instance, 66 is the chapter.
2. Heading: On this instance, 6603 is the heading. The heading dictates the precise class inside any explicit chapter.
3. Subheading: 6603.20 is the subheading. The final two digits of the worldwide Harmonized Code are extra particular, defining subcategories of merchandise.
4. Additional digits: 6603.20.3000 is the suffix or further digits. Nations can use an extra two to 4 digits for country-specific categorizations. For instance, the USA depends on 10-digit codes known as HTSUS numbers.
You may study extra about HTS codes in our two-part sequence, The Harmonized Tariff Schedule: Normal Guidelines of Interpretation By no means Written (However Used Each day) and The Harmonized Tariff Schedule: Past the Normal Guidelines of Interpretation.
You may search for HTS codes right here utilizing the ITC’s free search device:
Why Is the Distinction Necessary?
It’s essential to grasp the variations in HS numbers versus HTS and Schedule B codes as a result of the four-digit distinction may change the classification of your worldwide export. For exports, you may’t merely use an HTS or Schedule B quantity rather than an HS quantity.
Take into account the above instance of umbrellas: Think about you’re exporting components for umbrellas. In the USA, they’re recognized by the HTS code 6603.20.3000. Should you’re exporting these to Germany, and also you full the business bill utilizing all 10 digits of that code, the German importer’s paperwork shall be rejected—in Germany, the right quantity is 6603.20.0000.
As you may see, the primary six digits (the HS numbers) are an identical. The distinction comes within the final 4 digits. Although the HS code subheading is similar, the HTUSUS for umbrellas is one digit totally different than the German code, making it incorrect.
What’s a Schedule B Code?
The Schedule B code is a 10-digit subset of HTS codes for U.S. exporters. Schedule B codes are used for statistical functions by the U.S. authorities to watch U.S. exports.
- Schedule B codes are maintained by the U.S. Census Bureau as a substitute of the ITC.
- As with HTS codes, the primary six digits of a Schedule B code needs to be the identical as an HS quantity; nevertheless, the final 4 digits could also be totally different even than the HTS code.
Use Case: Firms that export will sometimes use the suitable Schedule B codes for his or her merchandise quite than HTS codes on their export paperwork and when submitting their EEI by way of the Automated Export System (AES). For the reason that Schedule B codes are a subset of the HTS codes, it is often faster and simpler to categorise merchandise underneath Schedule B than HTS.
Firms which are already classifying their merchandise utilizing the HTS codes for his or her imports might wish to use HTS classification for all their merchandise to eradicate the necessity to classify their merchandise twice—as soon as underneath HTS and as soon as underneath Schedule B. That’s completely acceptable, however do needless to say sure HTS codes cannot be used for exporting.
Additionally, the reverse will not be true. You can’t use Schedule B codes rather than HTS codes for import classifications.
Instance: Schedule B Codes
You may search for Schedule B Codes right here utilizing the Census Bureau’s search device:
When Not to Use a Classification Code
Some exporters choose to not embody an HS code on their business invoices. As a common rule, I feel it is a good suggestion to incorporate the correct code on the bill, however I deal with some explanation why you won’t in our article Why You Shouldn’t Embrace HS Numbers on a Industrial Bill.
Modifications to HS, HTS and Schedule B Codes
Like most issues in life, the Harmonized System, Harmonized Tariff Schedule and Schedule B codes in your merchandise can change. Each 5 years, the WCO opinions HS numbers to make sure they replicate modifications and updates in expertise and that they supply visibility into new product streams and rising international points. The seventh version of the HS, known as HS 2022, entered into power on January 1, 2022.
For the reason that HTS and Schedule B codes are primarily based on the WCO’s HS Codes, it is logical to imagine that these codes are up to date as nicely to replicate these modifications. However that is not the one time these updates can happen. The U.S. Worldwide Commerce Fee launched 10 revisions to the HTSUS in 2024 and has revealed the 2025 Fundamental Version. As you may see, you have to usually evaluation the classifications in your merchandise to make sure you’re utilizing the right, present codes.
Why You Have to Perceive These Phrases
There are penalties in case you misclassify your product. Should you’re doing this incorrect, you’re committing fraud—and you can face fines and different penalties. Fortuitously, there are a ton of fantastic sources obtainable to exporters. Listed here are just a few:
- Our Product Classification Software program, which might preserve you on the suitable facet of rules by serving to you correctly classify all of your merchandise. You may give it a attempt at no cost!
- The U.S. Industrial Service workplace positioned close to you. The Industrial Service is a good useful resource for corporations that wish to begin or develop their exports. You may discover a listing of native workplaces on their web site.
- The Commerce Data Middle, which you’ll be able to contact at 1-800-USA-TRAD(E) (1-800-872-8723).
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This text was first revealed in November 2015 and has been up to date to incorporate present info, hyperlinks and formatting.
