HS and HTS codes are both used to categorize goods in international trade, but they differ in the level of detail they provide. Here is a detailed introduction to them and the main differences between them:
HS Code (Harmonized System Code)
Global Standard: The Harmonized System (HS) Code is an internationally standardized system for classifying traded goods. It was developed and maintained by the World Customs Organization (WCO).
Worldwide Adoption: Over 200 countries and economies use the HS Code as the foundation for customs tariffs, international trade statistics, and trade policy enforcement.
Format and Structure: HS Codes are 6-digit numerical codes that categorize goods across 21 sections and 97 chapters, with further breakdowns into headings and subheadings.
- First two digits: Identify the chapter – the broad category of the product
- Next two digits: Define the heading – a more specific grouping
- Last two digits: Specify the subheading – the most detailed classification at the international level
Purpose: The primary objective of the HS Code system is to establish a standardized method for classifying goods across countries. This helps customs authorities:
- Collect tariffs
- Compile trade data
- Enforce international trade agreements
- Apply trade regulations consistently
HTS Code (Harmonized Tariff Schedule Code)
Country-Specific Classification: HTS codes are national extensions of the international Harmonized System (HS). Each country builds on the standard 6-digit HS code by adding extra digits to meet its own tariff, statistical, and regulatory requirements.
Length and Format: HTS codes typically contain 8 to 10 digits:
- The first six digits match the global HS code
- The remaining 2–4 digits are country-specific and provide further detail
Purpose: HTS codes are used to:
- Determine exact tariff rates for imported goods
- Apply import restrictions, licensing rules, or documentation requirements
- Implement preferential trade policies, such as free trade agreements, and benefits
- Collect detailed trade statistics at the national level
U.S. Example: In the United States, these codes are known as the Harmonized Tariff Schedule of the United States (HTSUS). The U.S. International Trade Commission (USITC) maintains and regularly updates the Harmonized Tariff Schedule of the United States (HTSUS) database.
Key Differences Between HS Codes and HTS Codes
Scope and Universality
HS codes are part of a globally standardized system developed and maintained by the World Customs Organization (WCO). Over 200 countries and economies use them as the standard language for classifying goods in international trade.
In contrast, HTS codes are country-specific extensions of the Harmonized System (HS). Individual countries or regions develop them to meet their unique tariff, statistical, and regulatory needs.
- For example:
- The U.S. uses the Harmonized Tariff Schedule of the United States (HTSUS)
- The European Union uses the Combined Nomenclature (CN)
Code Length
- HS codes always contain six digits and provide a universal framework for product classification.
- HTS codes typically have 8 to 10 digits. The first six digits align with the HS code, while individual countries add the additional digits (2–4) to provide more detailed classifications.
Primary Purpose
- The HS code system is designed to create a uniform global classification for goods. It supports:
- Customs processing
- Trade statistics
- Enforcement of international agreements and regulations
- The HTS code is used to:
- Determine exact import tariffs
- Apply country-specific regulations
- Enforce quotas, import restrictions, or preferential trade programs (e.g., under FTAs)
- Help governments track detailed import data
Why are HTS codes so important?
HTS codes play a crucial role in international trade, especially in the import process:
Avoid Fines and Seizures: Accurate HTS coding ensures that goods comply with the importing country’s laws and regulations, preventing fines, cargo seizures, or even confiscation due to incorrect classification or non-compliance with regulations.
Determining tariff rates: This is the core function of HTS codes. Each HTS code corresponds to one or more specific tariff rates. Incorrect or inaccurate HTS coding may result in:
Overpayment of tariffs: Use of a code with a higher tariff rate.
Underpayment of tariffs/fines: Using a code with a lower tariff rate, which may result in additional taxes and penalties if detected by customs.
Delayed clearance: Customs may require reclassification and adjustments to taxes, which can delay the release of goods.
Impact on regulatory requirements: HTS codes not only determine tariff rates but also whether goods require specific import licenses, quotas, quality standards certifications, health and quarantine certificates, etc.
Trade statistics: Customs authorities in various countries use HTS codes to collect detailed import and export data, which is used to formulate trade policies, conduct market analysis, and make economic forecasts.
Trade agreement benefits: Many free trade agreements (FTAs) or preferential trade arrangements offer preferential tax rates that must be applied for and enjoyed based on specific Harmonized System (HTS) codes.
How to correctly use HTS codes?
Correct use of HTS codes is essential for efficient and smooth customs clearance. Here are some critical steps and recommendations:
- Identify the accurate description of the goods:
- Gain a thorough understanding of the nature, composition, materials, functions, intended use, and manufacturing processes of your goods.
- For complex goods, additional documentation such as technical specifications, drawings, or chemical composition analysis reports may be required.
- Use official HTS query tools:
- For the export destination country, always use the official HTS query system of the importing country. For example, if exporting to the United States, use the Harmonized Tariff Schedule of the United States (HTSUS) published by the U.S. International Trade Commission (USITC).
- Specialized databases: Many trade data providers and freight forwarders also offer specialized HTS query tools, but the official version should always be used as the final reference.
- Start with the 6-digit HS code:
- First, determine the international HS 6-digit code for the product. This is typically relatively straightforward to identify.
- In the destination country’s HTS query system, enter the first six digits of the HS code and then progressively narrow down the search until you find the most appropriate 8-digit or 10-digit HTS code for your product.
- Note the General Rules of Interpretation (GRIs):
- The HS/HTS coding system has a set of internationally recognized general rules for classification, which guide the classification of mixtures, compounds, sets of goods, and other similar items. Understanding these rules is crucial for accurately classifying complex goods and services.
- Seek professional assistance:
- Freight forwarders/customs brokers: Experienced freight forwarders or professional customs brokers have specialized classification teams that are familiar with the Harmonized System (HTS) codes and customs regulations of various countries, enabling them to provide professional classification services.
- Customs consultation: In some cases, if the goods are very special or complex, you can seek official consultation from the customs authority of the destination country or apply for a binding ruling to obtain a legally binding classification decision.
- Regular updates and checks:
- The HTS coding system is updated regularly and typically revised annually. Ensure that the HTS codes you use are current.
- When goods change (such as changes in composition, function, purpose, or packaging), their HTS code must be reassessed.
