International trade can be complicated, especially when countries have their own sets of tariffs or import duties. When you import goods from abroad, you have to classify them a certain way, typically using a code. Learning how to use Harmonized System (HS) codes, Harmonized Tariff Schedule (HTS) codes, and Schedule B codes may seem daunting to new importers. But using these codes properly is vital for importing your goods legally.
What’s the difference between HS codes, HTS codes, and Schedule B codes? When would you use each one, and what happens if you don’t get the code right?
HS codes come from the international Harmonized System, administered by the World Customs Organization (WCO). These codes classify all goods for international trade and are a universal standard around the world. 180 countries currently use the Harmonized System. The codes consist of six digits that identify the categories of the goods. These six digits denote the chapter, heading, and subheading of the good you’re importing.
Most countries have their own Harmonized Tariff Schedules (HTS), which are up to 10 digits instead of 6. HS codes are universal but HTS codes are specific to individual countries. For any documentation that you use internationally, i.e. in more than one country, you would use an HS code instead of an HTS code.
Both the US and Canada have their own systems of tariff codes. In the US, it’s the Harmonized Tariff Schedule of the United States (HTSUS). In Canada, it’s the system of Canadian Customs Tariffs. Countries use HTS codes to assess duties on incoming goods. Importers label their shipments with codes so that border authorities can charge the proper amount of tariffs.
In the US, HTS codes are 10-digit numbers that incorporate universal HS codes and add supplemental digits for US-specific classifications. The US International Trade Commission (ITC) administers HTS codes.
In Canada, the Canada Border Services Agency (CBSA) keeps track of tariff codes, and both importers and exporters must use codes. Importers use a 10-digit import classification and exporters use an 8-digit one.
Why you need both HS codes and HTS codes
When you import something into another country, you need both the HS code and HTS code specific to that country. If you want to import something from France into the US, for example, you can’t use France’s tariff classification code because the US border authorities won’t accept it. You would need to use the HTSUS code for your French goods if you want to ship them to the US.
Example of HTS codes
This image shows an HTSUS code for horses. The first 6 digits consist of the HS code, showing that the horse belongs to the Live Animals chapter, falls under the heading of live horses, asses, mules, and hinnies, and under the subheading of purebred breeding horses. You would use these 6 digits for this type of import into any country that uses HS codes.
The remaining 4 digits are specific to the US. In this example, there’s no distinction for the imported horse or horses, so the statistical classification is “0000.”
Schedule B Codes
In Canada, the Customs Tariff system applies to importers and exporters, requiring them to use different types of codes. In the US, exporters use Schedule B codes, which are based on the HTSUS codes. Schedule B codes help monitor US exports and the US Census Bureau administers them, rather than the ITC. With a Schedule B number, the first 6 digits are the HS code, but the last 4 digits differ from the HTSUS code or the digits used for importing the goods.
Exporters use Schedule B codes when sending goods outside the US, as an HTSUS code cannot be used for exporting. You also cannot use a Schedule B number in place of an HTSUS code for importing.
What happens when you get your import and export codes wrong
Classifying your imports or exports incorrectly is considered fraud. Border authorities will charge you fines and impose penalties that will make importing and exporting more difficult in the future. Because they use tariff codes to determine how much duty you should pay for importing your goods, using the wrong code may make it seem like you’re trying to pay lower duties.
CBSA and US Customs and Border Patrol (CBP) take classifying imported and exported goods seriously, so you can’t afford any mistakes. Working with a customs broker ensures you have the right codes.
How do you find HS codes, HTS codes, and Schedule B codes?
- HTSUS codes: To find the proper code for importing goods into the US, you can use the search tool on the ITC website
- Canadian Customs Tariff codes: You can find Canada’s 2021 tariff codes on the CBSA website.
- Schedule B codes: The US Census Bureau website has a search tool for Schedule B codes.
Although all these codes are available online, knowing exactly which one to use can be tricky. Speaking with a certified customs broker can help you determine the code you need.
Working with a customs broker
Does importing jargon confuse you? Do you struggle to know which codes to classify your goods with? Don’t risk making an error and paying penalties. Work with BorderBuddy to ensure you always use the correct codes. Contact us today to get started.