What is HTS code? What is HS Code? Why do you need to find the right HTS code for your product and how can you do it?
If you are planning to import goods to the United States or this is your first time then continue reading this topic.
Let me ask you a question, have you ever received a letter from or a call from Customs Border Protection (CBP), notifying you that your cargo has been held for Inspection and you need to pay full duty for your shipment? No? Then consider yourself in the safe zone.
In this article, we will show you how to deal with this issue, in case you encounter it in the future. It will surely help you have a greater profile with CBP when importing cargo overseas to the USA. At the end of this topic, we will give you an example of how to verify the HTS code and how to calculate the Duties rate so make sure you watch until the end.
So, why do you need to find the right HTS code for your product and how can you do it?
Using the most accurate HTS code for your product will help you:
- Include the accurate Duties rate that you need to pay in your Trading plan before actually importing goods
- Save money on Duties and tax fees
- Avoid legal responsibilities with CBP
- The easier process to go through customs clearance for your next shipments
How to obtain the proper HS code.
- First, let’s ask your Supplier, they should know best about their product.
- Secondly, Find a freight forwarding company and ask them, you are welcome to ask us – Avail Logistics.
- Finally, Do your homework – Search on google which we will show you later.
Now you already know the reason why you need to understand the HTS code of your product and steps on where to obtain it, now it is time to understand and know the difference between HTS code and HS code.
The HS (Harmonized System) code is a worldwide terminology for the classification of items. The Harmonized System is a standardized numerical method of classifying traded products. It is used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics.
HTS (Harmonized Tariff Schedule) or HTSUS code is a system used to classify goods imported into the U.S. and is based on the global HS Code system used to classify trade goods worldwide.
HS codes and HTS codes all refer to the World Customs Organization’s (WCO) published nomenclature for the classification of goods that are traded across borders. This system allows Customs authorities to identify traded products in a standardized way.
You might be confused about the difference between HS Code and HTS code but they are not the same, per above HS Code is used in most countries around the world but when it comes to the USA you must use HTS Code for your product to classify the Duties rate.
These first six numbers in an HS code are used by both U.S. Customs and all of the other World Customs Organization (WCO) members.
The Harmonized Tariff Schedule (HTS) code can be looked at in two parts: the first six numbers are made up of the HS code. The additional 1 to 4 digits serve to notate country-specific tariff classification.
Each HTS code will have a different Import Duties rate and specific import requirements. Depending on the HTS code of your product, US Customs and CBP will apply import duties, anti-dumping, duty trade war, and any fees, requirements related that you need to pay.
The question here is how much you can spend without paying Duties in the US?
According to the US de minimis value, shipments of merchandise valued at $800 or less and imported by one person on one day generally may be imported free of duties and taxes.
For more information make sure to check the link below.
Okay, let’s say your total cargo value is over $800 and you need to check the HTS code and Duty rates before deciding to import this product and make sure your margins are outlined. There is some information that you need to get from your Supplier like the name of your product, material, usage, picture of your product, and country of origin. These are the basic details that you need to have on hand before getting advice from a Freight forwarder, depending on what kind of product a freight forwarder may need more detail but they should provide additional feedback if that is the case.
What Import Tax Do You Need to Pay for Imports from China to the USA? Duties and Taxes
- Import duty
- Additional Customs Duty Rate from China to the US
- Merchandising Processing Fee (MPF)
- Harbor Maintenance Fee (HMF)
- And Federal Excise Tax
Import Duties and taxes are imposed to protect national revenue and safeguard local industry but most importantly, import duties are needed to protect domestic companies.
Important note: For products made in China, be careful with the Duty Trade War, or called Additional Customs Duty Rate from China to the USA, the trade war between the US-led by Donald Trump and China and its President Xi Jinping started in July 2018. The US and China imposed additional tariffs on goods imported from the other country, which can be 7.5%, 15%, or 25%, meaning buyers in the opposing country would need to pay higher import taxes to bring their purchases into the country.
Was your product/ HTS code affected by additional trade duty?
It is important to know the accurate HTS code and Duty of your product because it helps you to avoid any problem with the US Customs later on.
Let’s say you don’t care about the HTS code and Duty rate because you buy goods from Supplier under DDP term, which means your Supplier will pay the Duties rates when the cargo hits the USA. If you don’t know what the DDP term is, make sure to check our video right here!
Going back to this example, in some cases, the Supplier will use the wrong HTS code or lower the Invoice value on purpose, if US Customs holds the shipment for review and reveals the improper code usage, who will take the responsibility? Your Supplier, Freight Forwarding, Customs Broker, or you?
The answer is The Importer of record or Buyer. Even though you have not decided on the HTS code and Duty of your product, you will be in charge in front of CBP if something wrong happens.
How can you make sure that you are using the right HTS cost? Ask, ask, ask and verify.
Here is an example of how to verify the HTS code by yourself:
You want to import Solar Flower Garden from China to the USA and you get this HTS code ARTIFI FLOWERS, PLAS, ASSM / 6702.10.2000/ 8.4% Duty from your Freight Forwarding.
To verify this HTS code go to Harmonized Tariff Schedule website, input the first 4 digits and you will see the Duty rate applied for your product here, which is 8.4% on Invoice value.
After the first two steps, you’ve already known how to check the rate on the Harmonized Tariff Schedule website. Now we’ll show you how to find whether your product is charged with Additional Customs Duty Rate from China to the USA.
Go to this website:
Roll down and enter 8 digits HTS subheading, see below, Solar Flower Garden in List 4B which means that the Duty Trade War will not be applied.
- (List 3) $200 Billion Trade Action : 25% Duty Trade War
- (List 4A) $300 Billion Tariff Action: 7.5% or 15% Duty Trade War
- (List 4B) $300 Billion Tariff Action: 0% Duty Trade War
Up next: How are customs duties and taxes calculated
After getting the current duty rates, it’s time to calculate the import duty and total import tax which mainly consists of the following parts. If your shipment is using Sea Transportation, for Air Transportation just remove the HMF fee (harbor maintenance fee) which only applies to shipments transported via sea.
- Customs Duty: Customs value * customs duty rate / imported quantity * customs duty rate
- MPF Fee: Commercial value * 0.3464% (not less than $27.2 and more than $528.33)
- HMF Fee: Commercial value * 0.125%
We hope this topic is helpful for you if you have any questions feel free to contact us!
Category: Need to know