Harmonized Tariff Schedule (HTS) Codes: What To Know (2024)

If you’re starting an online ecommerce business, chances are you may one day need to import products into the United States. This process, and subsequently working with US Customs authorities, often can seem incredibly complex and nerve wracking. 

That’s where your ecommerce secret weapon comes in to save the day: US Customs requires businesses to declare the items they’re importing into the country using an important identifier, known as a Harmonized Tariff Schedule (HTS) code. Understanding these HTS codes will help you avoid headaches at the border and ensure there are no hold ups or delays when it comes to shipments.

This guide is a crash course on how HTS codes work, with tips to determine the correct HTS codes for your products, and an explanation of the ramifications of improper usage—including fees, unexpected inspections, seizures, and penalties levied by US Customs.

What is an HTS code?

An HTS code is an international harmonized system of numbers and names used to classify traded products. They support global trade by simplifying customs processes, helping countries to accurately impose tariffs, collect trade statistics, and enforce trade regulations.

Developed by the World Customs Organization (WCO), each HTS code consists of several digits, with each set of digits representing a specific product category or subcategory. Codes can be located in individual HTS PDFs of each chapter, downloaded from the HTS website, or looked up in the HTS search database. 

HTS codes: A glossary

The world of international ecommerce and imports can feel complicated, in no small part due to a slew of terms and acronyms that make understanding processes even harder. Here are some of the governing bodies and terms you’ll encounter as you navigate the world of international imports.

World Customs Organization (WCO)

The World Customs Organization is an independent intergovernmental body representing 183 customs administrators around the world, responsible for approximately 98% of international trade.

It established and maintains the Harmonized Commodity Description and Coding System, typically referred to as the Harmonized System or the HS.

Harmonized System (HS)

The Harmonized System (HS), formally known as the Harmonized Commodity Description and Coding System, is a universal language for identifying and coding goods being traded internationally.

In other words, it’s a nomenclature for transportable goods. Almost all countries use this classification system for their customs tariffs and for trade statistics. 

HS code

A HS code is a six-digit code that categorizes each imported good. The first two digits represent the chapter, the middle two digits represent the heading within the chapter, and last two digits represent the sub-heading within the heading.

Though HS codes are important to a merchant when importing goods, they’re also relevant for the goods you ship to international customers. 

Harmonized Tariff Schedule (HTS) 

The HTS is a hierarchical numerical structure for describing goods for duty, quota, and statistical purposes in the United States. The system is based upon the HS. Be aware that the HTS is sometimes referred to as the Harmonized Tariff Schedule of the United States (HTSUS).

HTS code

HTS numbers are 10-digit codes that categorize each imported good. The first six digits are an HS code. The subsequent two digits identify the US subheading of the HS code to determine the duty rate, while the final two digits are a statistical suffix.

United States International Trade Commission (USITC)

Established in 1916, the United States International Trade Commission is in charge of trade-related mandates. It maintains the Harmonized Tariff Schedule (HTS).

Customs and Border Protection of the Department of Homeland Security (CBP)

US Customs and Border Protection is charged with maintaining the integrity of the country’s borders and ports of entry. It enforces the HTS.

Statistical Classification of Domestic and Foreign Commodities Exported from the United States (Schedule B)

Schedule B is the statistical classification for goods exported from the United States. It is maintained and published by the United States Census Bureau and is based on the HS.

HTS vs. Schedule B codes

Unlike HTS codes, Schedule B codes are 10-digit international codes that explain the statistical classification for goods exported from the United States. Schedule B is maintained and published by the United States Census Bureau and based on the HS.

To summarize the differences between HTS and Schedule B:

• HTS codes are used for international imports; Schedule B codes are used for exports. 
• HTS codes are governed by the USITC and enforced by US Customs; Schedule B codes are governed by the United States Census Bureau.

A brief history of HTS codes

The HTS was enacted by Congress and brought into effect on January 1, 1989. The system is based on the HS, unlike the previous Tariff Schedules of the United States it replaced. 

While almost all countries use the HS to determine tariffs and classify imported goods, the United States uses the HTS. And although the USITC maintains and publishes the HTS, CBP is responsible for interpreting and enforcing it.

Structure of HTS codes

All HTS codes are 10 digits long and broken down into five different sections. The first six digits are the HS number under the international HS.

Here’s the breakdown of an HTS code:

• Chapter: These first two digits identify the chapter in the HTS. The numbers are consistent internationally. 
• Heading: These next two digits identify the heading within that chapter in the HTS. The numbers are consistent internationally. 
• Subheading: These following two digits identify the subheading within that chapter. The numbers are consistent internationally. 
• Subheading (tariff rate lines): These two digits establish duty rates. The numbers are specific to the United States.
• Statistical suffix: These last two digits are statistical suffixes that collect trade data. The numbers are specific to the United States.

Take a look at this example of an HTS in action and see how you would classify the HTS of “certified organic green tea (flavored).”

How HTS chapters works

The HTS is used to classify imported goods based on a range of characteristics, like composition, product name, and function. The HTS is composed of more than 10,000 individual codes belonging to specific items. Codes are divided into chapters, headings, and subheadings that determine the HTS code for each good.

The most up-to-date version of the HTS can be found on the USITC government website, including General Notes, General Rules of Interpretation (GRIs), General Statistical Notes, and more guidelines with additional descriptions and clarifications. You should refer to these texts whenever classifying goods and understanding tariff rates. 

For example, Section II, Chapter 9 classifies “Coffee, tea, maté and spices” and will be relevant if you’re importing cinnamon into the US. Within this chapter, you’ll find HTS codes, descriptions, and duty rates for goods like the aforementioned cinnamon, as well as green tea, saffron, and more.

Each HTS chapter is given a two-digit number. In the case of Chapter 9 for cinnamon imports, all goods start with the same two digits (e.g., 09). 

How HTS codes and tariffs work

Within each chapter are four-digit headings, listed in the Heading/Subheading column. In the example of “Cinnamon and cinnamon-tree flowers,” the appropriate heading is 0906. Further descriptions appear in the Article Description column. 

As you go further down, you’ll see that the specific import classification of cinnamon has different 10-digit HTS codes that combine the heading/subheading and statistical suffix:

• Cinnamon-tree flower, neither crushed nor ground, has an HTS code of 0906.11.00.00
• Cinnamon (other) has an HTS code of 0906.19.00.00
• Cinnamon (crushed or ground) has an HTS code of 0906.20.00.00.

The HTS code of an item tells you the duty (or tariff) on an imported good in the Rates of Duty column, based on the quantity in the Unit of Quantity column. 

The rates of duty is divided into three different sub-columns:

• Column 1 (General): The rate of duty applied to imports from countries with which the United States maintains “normal trade relations.”
• Column 1 (Special): The rate of duty applied to special tariff treatment programs such as free trade agreements or the generalized system of preferences.
• Column 2: The rate of duty applied to imports from countries the United States does not maintain normal trade relations with, namely Cuba and North Korea.

There are three types of duty rates you will see in the HTS:

• Ad valorem: a percentage applied to the good’s customs value (e.g., 2.5%)
• Specific: a price per quantity of the good (e.g,. 5¢ per kilogram)
• Compound: an ad valorem and a specific price per quantity of the good (e.g., 2.5% + 5¢ per kilogram)

Now, back to the cinnamon example. Here’s what can be determined from the HTS number (0906.20.00.00) of crushed or ground cinnamon:

• Importing this type of good from most countries is free and does not have a duty tax attached. 
• If you hover over the attached note, you’re referred to 9903.88.15 in Chapter 99 on Temporary Legislation in the HTS. When you navigate to this section, you will find the following stated: “For the purposes of heading 9903.88.15, products of China, as provided for in this note, shall be subject to an additional 7.5% ad valorem rate of duty.”
• Based on Column 2, the specific rate of duty applied to this item from Cuba and North Korea is 11¢ per kilogram.

As an entrepreneur, knowing the HTS code of a product doesn’t only provide a tax rate on importing it into the US, but it also can provide insight on the best place to source your products in the most cost-effective manner to increase the upside of your business.

Common issues with HTS codes

Incorrect use of HS codes on your products can have consequences that impact your business and prevent your goods from coming into the United States and getting to your customers. 

“The classification and valuation of goods is an important part of the importation and entry process,” says an informed compliance publication, published by US Customs and Border Protection in 2004 and updated in 2020. “At a minimum, incorrect classification or valuation may lead to delays and increased duties (plus interest). The failure to use reasonable care in either situation may also lead to detention or seizure of the merchandise, and the imposition of civil or criminal penalties.”

Here are a few things to keep in mind as a business owner importing goods into the United States:

1. You are responsible for the proper HTS code. As a merchant, you are considered the importer of record and are ultimately responsible for the proper classification of your goods. Getting HS codes right will prevent these consequences from being levied by US Customs.
2. Use the correct code. Choose the code that is most correct, rather than the code that has the lowest tariff rate. As a rule of thumb, use the code that describes your goods in its condition as imported, as a Customs agent would view it at the port of entry. 
3. Be aware of trade agreements and programs. The United States has trade agreements that result in reduced tariffs or no tariffs on specific goods. Refer to the General Note section of the HTS for more details on rules and conditions for obtaining particular tariff treatment and understanding various trade agreements, like NAFTA.

How to add HS codes to your Shopify goods

While Shopify does not currently support adding HTS codes to products, the first six digits of an HTS code are the equivalent of an HS code, and can be inputted. This allows you to show international customers an estimate of duties at checkout.

Duties are calculated based on a few factors, including a product’s declared value and shipping costs, the product category as determined by the HS code, the country or region of origin, the destination country’s tariff rates, and applicable trade treaties.

Here’s how to add an HS code to your goods in the Shopify admin:

1. On the left hand menu bar, select Products and then click on Add Product on the top right hand side.
2. Scroll down to the Shipping section.
3. Navigate down further to the Customs Information portion of the Shipping section.
4. Add the country/region of origin for your product. In most cases, this is where the product is manufactured. You may also need to add the province of origin, depending on the country. 
5. Fill in the HS (Harmonized System) code field.
6. Search for your item (e.g., “candle”) and select the six-digit code that comes up (e.g., “3406.00”). 
7. If you have a code longer than 10 digits, enter it manually. 
8. Click Save.

Note: You can also add HS code information through the bulk editor or import it with an Inventory CSV file.

Certain stores on the Advanced Shopify or Shopify Plus plans may have access to a beta feature that allows them to collect duty and import taxes at checkout. 

If you do not have access to this feature, you can download a third-party app from the Shopify App Store to show an estimate of the cost of duty and import taxes for an order to your customers at checkout. Bear in mind that third-party apps might charge you additional recurring or transaction fees.

Visit the Shopify Help Center to read more about adding HS codes to products and duties:

The future of HTS codes

HTS codes can potentially change based on the following trends and future developments in international trade:

• Artificial intelligence. The supply chain industry is leaning on artificial intelligence to speed up manual processes. You could use similar technologies to locate accurate HTS codes when categorizing new products (rather than scanning the database manually).
• Trade agreements or conflict. The WHO committee meets twice a year to discuss any changes to HTS codes. These changes can be impacted by geopolitical tension or new trade agreements between countries, so keep an eye out for regular updates on the USITC website.
• Green trade policies. As entrepreneurs continue to meet consumers’ sustainability demands, the latest innovations will require new HTS codes. Some countries may also favor sustainable or eco-friendly products with HTS codes that have lower duties and taxes.

Manage HTS codes for your imported products

Knowing how to classify your goods with an HTS code will help you avoid headaches when it comes to bringing your items across the border. That will empower you to seamlessly expand your store to multiple countries. 

By learning how to navigate the system and build an awareness of some of the most common HS code mistakes, you’ll avoid international import errors and mishaps. Then, you can focus on bringing your items into the United States, and packaging and sending them off to customers—building your business one shipment at a time.

For more information on how to sell products around the world with Shopify, read about Shopify Markets, a commerce solution that helps you easily sell to anyone on the web from a single store.

Disclaimer: This content provides general information to merchants who import goods through US Customs and is for informational purposes only. Export classification systems change often and without notice. You are responsible for reviewing and using this information appropriately. This content doesn’t contain and isn’t meant to provide legal advice. You should consult your own legal counsel to determine how the laws in your region and the region in which you import goods might affect your business. To sell products using the Shopify platform, you must comply with the laws of the jurisdiction of your business and your customers, the Shopify Terms of Service, the Shopify Acceptable Use Policy, and any other applicable policies.