The process of importing products into the United States involves compliance with customs rules and regulations and the hassles of paperwork and other procedures related to the importation process.
It is technically required that each business owner declare the nature of imported goods using the Harmonized Tariff Schedule (HTS) code identifier. It can be difficult to use HTS codes properly, understand HTS code meaning, and ensure deliveries are not delayed.
The term is not only associated with the shipment and delivery of imported goods, but it is also a vast terminology that you must do right to stand out among your eCommerce business competitors.
Using a reliable and trustable platform like ImportDoor, you can successfully gain accurate knowledge about HTS codes, your competitors, target market, supplier, bill of lading, and ways to improve your revenues in the United States.
You can find the following information helpful to know about the HTS codes. Moreover, you will be able to determine the HTS code meaning and how it works and what is its importance in importing and exporting goods. Continue reading till the end to have a complete understanding of it.
HTS Code Meaning- A Quick Overview
An HTS code is a ten-digit number used to determine the duty incurred or tariff tax on imported goods in the United States. The International Trade Commission maintains the codes enforced by the Department of Homeland Security.
Structure of HTS Codes
The ten-digit extended HTS code meaning can be easily understood by its division into five different sections. These are:
- Chapter: The first two digits of a code determine its Chapter
- Heading: Next two digits in the code explain the position of the code within a chapter.
- Subheading: These two digits after the heading explains the position within the heading.
- Subheading (Tariff Rate Lines): These next two digits tell about the duty rates and are specific to the United States.
- Statistical Suffix: The last two numbers collect the trading data specific to the United States.
How Does the HTS Code Works?
The primary purpose of HTS codes is to classify the imported goods based on their characteristics, function, product name, composition, etc. The latest version of the HTS code lists can be found on the USITC website, divided into 99 chapters and 22 sections listing a wide range of goods you can import.
Every section and chapter have section notes and chapter notes, respectively. Among all the chapters in the HTS code listings, three chapters have different purposes, which are:
- Chapter 77 is for future use.
- Chapters 99 and 98 are reserved for national use and should be consulted before classifying any goods in this category.
Typically, the HTS codes comprise General Statistical Notes, General Rules of Interpretation (GRIs), General Notes, and other guidelines with the following information about explanations and clarifications on how to categorize the goods and understanding more about the tariff rates.
Entire HTS codes are divided into headings, subheadings, and chapters to determine each product’s HTS code. Moreover, more than 10,000 HTS codes are used to determine specific products.
For instance, Chapter 9, Section II consists of ‘Tea, Coffee, spices, and mates’ and will have relevance if you import cinnamon in the US. This section will find all the HTS codes related to this category, including saffron, green tea, etc.
How Can You Avoid Issues with HTS Codes?
Knowing the HTS code meaning and understanding will help you avoid issues and inconvenience during the entire importing process. Following are some crucial aspects that a business owner must keep in mind:
It is Your Responsibility to Mention a Proper HTS Code
In transporting goods, you will come across communication with the cargo operator for the transportation of goods. Both the supplier and transporter are required to disclose the HTS codes. However, the supplier is responsible for mentioning the correct HTS code to avoid issues in shipment. Therefore, verify the codes before handing over the goods to the transporter.
Keep Yourself Updated with Trade Agreements
According to United States laws, there are trade agreements for specific products with no or fewer tariff rates. Though these agreements might change depending on the state’s policy, refer to the General Note section to ensure you know their trade agreements and tariff treatments.
Always Use the Right HTS Code
With several HTS codes, there is a possibility that a single code can fall into different categories, confusing the owner for choosing the correct HTS code. Always choose the correct code for a product rather than the one with lower tariff rates. In such a scenario, the rule of thumb is to choose the code that better describes the product’s transporting condition, which means the condition at which a custom agent will view it.
Importance of HTS Codes While Importing and Exporting Goods
The HTS codes are necessary for government officials to have a record of the imported products entering the premises of the United States and collect the defined amount of taxes. Moreover, having accurate information about the products exchanged at the borders is their legal responsibility and part of their jobs.
The maintaining of the correct data of HTS codes while exchanging the goods offers the following benefits:
- The proper HTS code meaning helps the officials understand the product and calculate its exact duty rates.
- When the products are assigned with the correct HTS codes, there are fewer chances of delays and shipment issues.
- Correct HTS codes save the transporter from paying extra taxes or being fined for inaccurate information.
Bottom Line
Having smooth transportation of goods in the US is possible with the proper usage and understanding of the HTS code meaning. It is essential to avoid delays in the shipment and protect yourself from high taxes and penalties.
If you want to save yourself from headaches and get long-term benefits for your business, ImportDoor can handle all the shipment hassles for you. Also, you get information about the importers, exporters, suppliers, and vendors across the United States.
Having accurate information about navigating the system and keeping yourself updated on the latest policies can help you avoid mishaps and importing errors. Instead, you can focus on developing your business and building a healthy customer relationship.
