Ecommerce companies that are looking to expand their businesses internationally or people who want to get into the import business are often stymied by the many regulations and procedures that have to be followed to get their products legally shipped overseas.
One such regulation is that an HTS code must appear on all imported shipments, so if you’re planning to begin importing goods, you’ll not only need to know how to find the HTS code, but also what it is and why it’s important. This guide will help.
What is an HTS Code?
HTS is an acronym for Harmonized Tariff Schedule and the HTS code is an eight-to-10-digit number that is used for classifying internationally traded goods. The HTS code corresponds to specific products and allows customs officials to calculate commodity duties and taxes for every item that enters the country.
In the United States, the HTS code is 10 digits long, with the first six digits taking the same form as the Harmonized System (HS) code and the latter four digits making up the full HTS code.
The Harmonized System was developed by the World Customs Organization to standardize how commodities are classified around the world. Without this system, the customs process would be chaotic and extremely difficult to navigate. Shipments would be delayed as the correct duty and tax would need to be calculated individually.
What Does the HTS Code Mean?
Each part of the HTS code means something to a customs official so that products can be identified quickly without ever opening a package. As mentioned above, the length of the HTS code varies from eight digits to 10 digits based on country, but in the United States, the code is 10 digits long. The first two digits represent the “chapter” of the product. It is similar to a main product category. For example “33” is the chapter for Essential Oils and Resinoids, Perfumery, Cosmetic, or Toilet Preparations.
The next two digits of the HTS code represent the “heading,” which is the subcategory of the product. As an example, “03” represents the subcategory or “heading” of perfumes and toilet waters. The next two digits represent the “subheading,” if there is one. If there is a “00” in the fifth and sixth places, there is no subheading. If there are another two numbers, the product is subcategorized even further. For instance, a “10” subheading is for lip makeup preparations.
Digits seven and eight represent a characteristic of a product type. For instance, some perfumes contain alcohol and some don’t. Those that contain alcohol will have a “30” in the seventh and eighth spots, while those that don’t contain alcohol will have a “10” or “20” in those spots. The final two digits represent additional trade data for some products. In many cases, these two numbers will be “00.”
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Why Are HTS Codes Important?
Quite simply, HTS codes are important because they streamline imported products through the customs process. They allow the correct taxes and duties to be collected without delaying shipments. In other words, they are important so you can get your products to your customers as quickly as possible.
Importers will need their HTS code for packing lists, shipping bills, letters of instructions, commercial invoices, certificates of origin, and other shipping documents. Make sure you know your HTS codes for the products you sell to keep your shipments moving smoothly.