HTS Codes of US

The HTS code for the US is a 10-digit import classification system that is specific to the country. Also referred to as HTS numbers, these codes are administered by the US International Trade Commission (ITC). All US importers must know the correct HTSUS Codes corresponding to specific products as commodity duties are calculated based on this classification. The codes serve as the foundation for the import and export classification systems used in the US and by many trading partners. An HTS Code takes the same form as an HS Code for the first six digits and then has four different last digits. 

HTS Codes Structure

Out of the 10-digit numbers of the HTS Code, the contracting parties must use at least four-digit and six-digit provisions, international rules, and notes to ensure harmonization. However, they can also adopt additional subcategories and notes. The ten digits of the HTS Codes are separated into the following four components:-

• The first two digits represent the chapter. There are 21 distinct sections split into 96 chapters. 

• The second two digits represent the heading that dictates a specific category within a particular chapter. 

• The last two digits define the sub-heading of the specific category within the particular chapter.  

• Additional two-four digits can be used for country-specific categorizations. 

HTS Codes Functions/ Purposes

HTS Codes help government officials identify the goods that are being imported and exported across a country’s borders. The mechanism also guides the officials to apply appropriate taxes for various product categories. Besides being a vital tool for customs clearance purposes, the codes classify and categorize products in a worldwide system. HTS Codes are crucial to importers and exporters because it is their legal responsibility to make sure that the goods have the right product classification.

Getting an HTS Code is one of the most vital steps every shipper must take before entering the international trade market. Some suppliers accept the purchase order from the importer and ship goods without knowing what the HTS Code for that product is. This is not a good business practice and can create major problems when the goods land at the intended destination. Hence, the importance of HTS Codes should never be underestimated. 

Who Determines HTS Codes?

The codes are governed by the WCO and are updated every five years. The WCO has assigned every product and its classification a specific six-digit code. For further classifications, countries are allowed to add longer codes to the first six digits. 

To classify products for exports, the US uses a 10-digit subset of the HTS Code known as a Schedule B number. The first six digits represent the HS number. There is a Schedule B number assigned by the US Census Bureau Foreign Trade Division for every physical product. We will later read more about the Schedule B number. 

How to Identify your Product’s HTS Code?

As discussed above, HTS Codes facilitate the smooth flow of international trade and also help officials levy duty and tax depending on the specific product. Keeping this in mind, the Census Bureau offers a free-to-use and popular online Schedule B search tool that can be useful for businesses to classify their products. This tool is the most commonly used as well as a trusted method for classifying commodities. The site also provides user-friendly training resources to help businesses identify their Schedule B number. One can even reach out to the contact number provided in case any assistance or additional information is needed on this front.

That being said, some products are difficult to classify. In such instances, the Customs Rulings Online Search System (CROSS) database can be used to find the Schedule B Code where the appropriate codes for such products may be available. CROSS contains official, legally binding rulings, requests from other exporters and importers for Schedule B codes. The database can even be used to determine whether other exporters or importers had requested a ruling on the same or a similar product and what was the outcome of such a ruling.

How to Identify your Product’s Import Duty Using HTS Codes?

If you are importing from a country that has entered into an international trade agreement with the US, then the US customs duty rates on a particular commodity are likely to be reduced. However, this discount does not apply to all the products. You can obtain detailed information about this by checking the official HTS list published by USITC. Your customs broker will also be able to guide you in this process. In most instances, the import duty rates on the list are just an estimation. The final authority lies with the US Customs & Border Protection (CBP) who reflects the correct rate.

Example of Identifying an HTS Code & Import Duty

To calculate US customs duties of a product (tools) from China, you need to have the following data readily available:-

• Name of importing country -  United States of America

• Name of exporting country - China

• HTS Code of the product - 9903.88.01 (obtained from the official HTS list)

• Name of the product - Tools

• Value of commercial cargo - Estimated at the U.S. $10,000

You can calculate the payable customs duties for the mentioned product in the following manner:-

• Enter the product’s HTS Code into the USITC’s HTS search website to know the duty rate for that product.

• Check if there are any trade agreements between the US and China and for this particular product. 

• Multiply the duty rate (percentage) by the commercial value of the cargo. If the duty rate is 20% and the commercial value is US $10,000, then the duties payable will be:- 20% x 10, 000 = $2,000

Calculating Import Duty Rates for Other Countries

If you are importing to other countries, certain factors may need to be taken into consideration when calculating the import duty.

E.g. calculating import duties for the same import into Spain will be done differently. For one, it will be based on the customs value (value of goods, freight cost, and insurance) instead of the value of the goods.

You would need the following information for calculating the import duty:-

• Name of importing country - Spain

• Name of exporting country - China

• HTS Code of the product -  9903.88.01

• Name of the product - Tools

• Value of commercial cargo - €10,000

• Ocean freight rate - €1,000

• Insurance -  0.3% of cargo value (assuming that customs insurance is applicable, and no insurance was taken out)

The customs value is calculated by adding product value, ocean freight rate, and insurance.

€10,000 + €1,000 + 0.3% x €10,000 = €11,030

You have to multiply the duty rate applicable to the imported product by the above-calculated customs value to determine the amount of import customs duties payable.

Schedule B Code

The Schedule B Code or Schedule B number is a coding system administered by the International Trade Management division of the US Census Bureau. The code helps monitor US exports and takes the same form as HS Codes for the first six digits. However, it includes four additional digits for a total of 10 numbers, making it easier to accurately identify and classify products.

The 10-digit Schedule B Code must be mentioned on all documents or filings used exclusively for export. The Schedule B number must be part of the Electronic Export Information (EEI) to be submitted to the AESDirect when the value of goods exceeds U.S. $2,500 as per the Schedule B number and subject to a few other conditions. 

The Schedule B Code must be included on the Shipper’s Letter of Instructions if you are using the services of a freight forwarder or some other third party to file on your behalf.

Summary of Schedule B Codes:-

• There are 10 digits in a Schedule B Code.

• Schedule B codes are used exclusively in the US and only for exports.

• The Schedule B code for a specific product may differ from the HTS codes used for imports.

There is a helpful, efficient, valuable, and free-of-cost Schedule B search engine provided on the Central Bureau website. You can identify the proper code by entering a description of your product in the search engine. Some classifications are complicated and technical. That is why the search is best conducted by someone who has excellent knowledge about the technical specifications of products.

Difference Between HTS and Schedule B Codes

HTS Codes are used in international trading processes for determining customs duties, and fees. They start with six digits and can exceed if a specific product is involved in the trade. HS Codes must be mentioned on the commercial invoices.

Schedule B Codes are used exclusively in the export of goods from the US. The first six digits of this 10-digit code are universally recognized HS Codes. The last four digits are unique. The Schedule B codes are needed to track exports and check what products are leaving the country. These codes are updated annually.

FAQs

Can the HTS number be used to classify exports?

Yes. HTS serves as the foundation for the import and export classification systems in the US.

Do other countries use the same classification system?

Yes. The HTS Code description and the coding system were created by the WCO to categorize goods into 5,000 plus commodity groups. It is accepted and implemented by more than 200 countries worldwide.

Is the HTS code required on the commercial invoice?

No. It is not necessary to put your HTS code on the commercial invoice as there could be some disagreement or confusion between you and the customer regarding its use.