Insights
Understanding the customs classification system and the tariffs you’ll need to pay is crucial to importing your products into the US. Tariff classification can be a complex area. Assigning the correct tariff codes ensures you’ll pay the correct duty amounts and reduces your risk of an audit.
We know you have questions about customs classification, and we’re here to provide the answers. From understanding how goods are classified to understanding tariff codes and rules, we’ve got you covered.
Read on to discover how correct classification will make it easier to get your products into the US marketplace.
What is an import or customs classification?
Customs classification is the process of assigning specific customs codes to any products you import into the US. These codes are used to identify the types of products you’re bringing in and assign tariffs so you can pay the correct duties.
What are customs and import classification codes?
Customs classification codes in the US are based on the Harmonized Tariff System (HTS). The HTS publishes a standard list of codes that act as a baseline for classifying all trade goods. The country that you’re importing into may add further details to these customs codes for their own reporting, management, or similar needs.
What is tariff classification?
Tariff classification is the process of assigning the correct tariffs and duties to products you’re importing. Tariff classification is determined by what products are made from and the intended use of those products. This determines the correct tariff for specific goods and is used to calculate the total duties owed.
What is a tariff classification number?
Tariff classification numbers are the same as customs classification codes. They are based on the HTS, and may have additional supplemental information added to the code for the use of customs in certain countries.
Are tariff codes universal?
Most countries use the HTS for classifying products, so this tariff system is the most universal one in common use. Specific countries may add supplemental information to some HTS codes for their own purposes, but the basic codes will remain the same. The taxes and duties applied to specific codes will vary widely between countries, even if the code itself does not change.
Do all products need to be classified for customs purposes?
Commercial goods being imported into the US must normally be classified, although duties are generally only levied if the value of the goods is $800 or more.
How is a tariff classification applied to goods?
Applying the correct customs and tariff classification can depend on several factors:
- The intended use of those goods.
- The composition of those goods.
These two areas help to determine the type of finished goods you are importing. Together, this determines the correct customs classification which defines your products. You can then look up this classification under the HTS and apply it to your products.
If you’re unsure of the correct customs classification, you can work with a customs broker. They will use several techniques to understand your products and advise you on the right HTS classification code.
Who is responsible for ensuring the correct classification of goods?
Ultimately, it’s the importer’s responsibility to classify goods correctly. Importers can choose to outsource customs classification to a customs broker, although that may not transfer the legal liability.
How are tariff and duty amounts calculated according to customs classifications?
The tariff that’s applied to your products will depend on the following:
- The specific HTS code for your goods
- The country of origin
- The destination country
- Free trade or other agreements
- Other factors
Together, these will determine your duty rate. This rate will be combined with how much you’re importing to determine your overall duty amount.
How do I find the correct HTS customs classification number?
You can look up customs tariff numbers online:
- Harmonized System (HS) Codes lookup
- HTS classification code search for importing into the US
- PDFs of all HTS codes in the US
Alternatively, a licensed customs broker can find the correct customs classification code on your behalf.
How do I find the tariffs for specific customs classification codes?
The tariffs that apply to each customs code are available on the PDFs and customs code searches at the following websites:
These resources show the tariffs that will be applied when importing goods into the US. Tariffs are normally applied as a percentage of the product’s overall value, as an amount per weight, or as an amount per volume. These tariffs are multiplied by the appropriate quantities to calculate how much duty you will pay.
When are tariffs imposed on imported goods?
Tariffs and duties are imposed when clearing goods through customs.
How do I file customs classifications?
You need to file customs classifications directly with US Customs and Border Protection (USCBP). You must use the correct forms and file them electronically. If you don’t have access to file with USCBP, a licensed customs broker can file classifications on your behalf.
What are the rules for US customs classification?
You can find general rules on classifying products on the USCBP website. These rules can be complex and difficult to understand, so we recommend working with a licensed customs broker. A broker will be able to analyze your import needs, help to classify your goods, and ensure you stay in compliance with importing rules.
What happens if I classify products incorrectly or break the rules?
Incorrect classification can lead to clearance delays, increased duties, audits, inspections, fines, and other penalties. A licensed customs broker will ensure that your imports are fully compliant with USCBP rules.
Besides tariffs and duties, what else does customs classification provide?
USCBP uses classification codes in several ways, including:
- Determine if additional permits or licenses are required
- Monitor controlled products
- Set rules of origin and destination
- Analyze transport statistics
- Monitor prices
- Enforce quotas
- Research economic trends
- Understand the impact of trade agreements
Can USCBP help me to classify products?
Yes. USCBP offers a service where they will provide classification rulings once you’ve provided details of the products you’re importing. It can take time to get a USCBP ruling, so it’s best to apply well in advance of your import date.
What is a customs classification specialist?
A classification specialist can review and analyze all your products and ensure they have the correct tariff codes applied. Some specialists and customs brokers can also make suggestions to reduce your duty amounts, using techniques like tariff engineering, temporary imports, and duty drawback. They will also help you take advantage of free trade agreements and keep you updated on changes to regulations to ensure you’re always compliant.
Customs brokers can manage the process of filing the correct import paperwork, clearing goods through customs, and paying duties on your behalf.
Where can I learn more about customs classification services?
We’re glad you asked. USCBP has some resources on customs classifications, which we’ve linked below. You can also read our in-depth guide to customs tariffs and classifications in our “Expertise Insights” section. If you want to discover how we can help you, please do get in touch.
