Posted by Nathan Book
The Harmonized Tariff Schedule (HTS) establishes the tariff rates and statistical classifications for all goods imported into the United States. The HTS is based on the international Harmonized System (HS), which is the global naming system applied to most world trade in goods. Published by the United States International Trade Commission (ITC), the HTS is fully available online and can be accessed here.
Within the HTS, general rules of interpretation, section outlines, and chapter notes exist to aid users in understanding and interpreting tariff classifications. General rules of interpretation delineate foundational rules used to classify goods and consist of six rules that must be followed in order to ensure consistency and compliance with the HS system. Section outlines then group related chapters into broad categories based on product type, providing a high-level overview of the goods covered by each section. Moreover, the chapter notes provide more detailed legal definitions and rules pertaining to classification of goods. Since the chapter notes hold legal weight in that goods cannot be classified without consulting them, referencing the chapter notes is an essential step in reviewing any goods within the HTS.
In order to maintain a streamlined system of categorization, each traded good is also assigned a ten-digit HTS code. While the first six digits of HTS codes align with the international HS codes, the United States adds four additional digits for more detailed classification and statistical reporting, as well as the determination of tariff rates. With the latter being particularly relevant in today’s trade environment, understanding such rates is imperative.
The tariff section of the HTS contains three primary columns. The definitions of each column reference the image below, which contains details from the HTS for the good “snails, other than sea snails,” with an HTS code of 0307.60.00.00.
Column 1– General: This is the standard duty rate applied to imports from countries with which the United States maintains normal trade relations. Thus, the imports of many U.S. trading partners, such as Canada, Mexico, and Japan, would be subject to a 5% duty on snails.
Column 1– Special: This section provides a reduced or duty-free rate, if applicable, utilized by countries that have a free trade agreement or preferential trade program with the United States. With the example of snails, imports from countries named within the listed abbreviations would not be subject to any duties.
Column 2: This duty rate applies to a select few countries, such as Cuba and North Korea, that do not have normal trade relations with the United States. Imports from these countries are subject to much higher duty rates, such as the 20% rate shown below on imports of snails.
Although keeping up with the HTS can seem challenging at times due to its vast and ever-changing nature, doing so is not an insurmountable task. During my internship at the World Trade Center Harrisburg, I have gained valuable insight into the structure and interpretation of the HTS. Below is a summary of key tips and takeaways I have developed through this experience:
Review the general rules of interpretation. As the legal foundation for classifying goods under the HTS, they provide essential guidance on how to interpret chapter headings, subheadings, and notes. These rules must be followed in order to ensure accurate and consistent classification and interpretation, and I have found that reviewing these prior to looking at product codes makes the process much easier and more efficient.
Utilize the chapter notes. These contain more detailed definitions, inclusions, and exclusions for specific goods, providing needed clarification during the classification process. Since correctly determining the exact classification of a product is a necessary step in finding the relevant duty rate for a given import, chapter notes must always be referenced in tandem with the HTS during this step.
View past rulings. Consulting binding rulings issued by U.S. Customs and Border Protection (CBP) can provide helpful precedent when classifying goods. Offering insight as to how CBP has previously interpreted similar products, such rulings can be viewed using the Customs Rulings Online Search System (CROSS) here or by clicking on the stat suffix for a given good in the online version of the HTS.
Compare similar products. Another simple way to determine the correct HTS code for a given good is to look through the HTS for similar products to reveal patterns in classification logic. I have noticed that distinctions between products are often subtle, but can be highly significant when it comes to duty rates, making careful comparison and discernment a necessity.
Complete the interactive HTS training. The U.S. ITC offers self-paced online training modules on how to understand and use the HTS here at no cost. I found completing this training to be beneficial, providing me with foundational knowledge allowing me to gain confidence using the HTS.
By applying these strategies, I have found that navigating the HTS becomes much more effective and intuitive. A solid understanding of its structure and supporting resources not only enhances classification accuracy, but also supports more informed trade decisions. Although international trade is inherently complex and involves numerous systems and guidelines, effectively utilizing available resources like the HTS can simplify the process considerably.
