Understanding HTS Codes For E-commerce Exports

As an e-commerce entrepreneur, you would want to expand your presence globally. A mobile app or website helps you to sell to international customers.

Easier said than done. Shipping products to international countries requires meeting local customs compliance requirements, including paperwork and legal declarations.

To ensure this process runs smoothly, you have to classify the products correctly so that the right tariff can be applied to them. This is where the Harmonized System (HS) comes into the picture. This is a global classification system comprising 5,000 commodity groups, each represented by a six-digit code. Let’s understand it better in this blog.

Imagine you are a business owner who manufactures a product in the United States. You need to find a way to import that product into Canada. The good news is that, as a manufacturer, you are likely familiar with Harmonized System and the import duties associated with them.

The bad news is that navigating the complex web of HS codes can be tricky, and making an error can result in costly delays or even fines. In this article, we will walk you through the process of adding HS codes to your products and explain some of the benefits of doing so.

What Is an HS Code?

An HS (Harmonized System) code is a six-digit numerical classification system that is used to classify traded products by custom authorities for identification of the product, its duties and tax assessment, and other international sales operations. Utilizing these codes can improve your business efficiency by streamlining the shipping and customs process.

The HS codes, created by WCO (World Customs Organization) are used by e-commerce enterprises all over the world to compute trade duties. It is extensively used to recognize the goods and apply the right tariffs so that international trade becomes easy and shipping costs are applied properly.

When you add an HS code to your product, you are essentially telling the customs department what that product is and how it should be taxed. This information is then used to process your shipment, making it easier for your products to clear customs.

What is the structure of an HS code?

In order to achieve consistent categorization, an HS code is organized in a legal and logical structure backed by well-defined principles. This system is currently used by over 200 countries. An HS code has the following structure:

Hence, it becomes extremely necessary for e-commerce businesses to synchronize the product information related to HS classification with various marketplaces in order to avoid business turndowns.

What is an HTS code?

Now that you know what an HS code is, let’s tell you about the HTS codes. We have already mentioned that the HS code is a six-digit code to recognize or classify a product. Many countries attach additional digits after the HS code which provides supplementary details. Some countries have 7-10 codes in total and it is determined by individual countries of import. For instance, the USA has the Harmonized Tariff Schedule of the US (HTS of the US or HTSUS). It is a 10-digit number wherein the last four digits are unique to this country to help classify the products more precisely and establish appropriate tariff or duty rates.

The additional numbers that follow the first six HS digits, also known as suffixes, are used to indicate the product duty rates specific to that country. The extended suffix number helps e-commerce businesses to declare and ship items internationally.

Additionally, the customs authorities use the suffix codes to identify the product’s country of origin for faster delivery to customers.

There are a number of different resources that you can use to find the appropriate HS code for your product. The Harmonized Tariff Schedule of the United States (HTSUS) is the authoritative source for tariff classifications in the US. You can find the HTSUS online or in print form at most local libraries.

What happens if e-commerce businesses don’t maintain proper HTS codes for their products?

Shipping goods internationally can be tricky and unpredictable due to trade barriers and bureaucratic hurdles. Customs authorities require specific requirements to clear shipments at the border, such as complex tariff codes, taxes & duties, and international trade regulations. To successfully ship goods across borders, you need to declare the correct HS code (HTS code) for your commodity.

Also, e-commerce businesses have to stay up-to-date with the HTS codes and ask for them from the manufacturers to continue international sales. Errors in non-maintenance of proper HTS codes for your products can result in:

Also, if the HTS code for the traded product is not matching, you may risk paying penalties and fines.

How to Look Up At HTS Codes?

The first step is to find the product that you want to classify. One of the popular ways is to use USA Customs Clearance’s HTS code lookup tool. You can either search by product name or by product code. Once you have found the product, you will see a list of HTS codes that correspond to that product.

If your supplier has already provided the HTS code, all you have to do is put it into the search bar to find its category and the customs owed by it.

Finding the appropriate HTS classification can be daunting sometimes. For instance, you’ll not find the car seat HTS code under the “Motor Cars and other motor vehicles” section. Instead, you’ll find it as a “Seats” subheading under the “Furniture (9401)” heading! This is because the classification can vary based on the product’s composition, form, and function.

If you are unsure of which code to use, you can click on the "help" button next to the code section. This will provide you with more information on how to classify your product. You can also contact your local customs office for assistance.

Once you have selected the correct HTS code, you will need to enter it into your products' description fields in your e-commerce platform or inventory management system.

Assigning HTS Codes to Products

You may be wondering how to add HTS/HS codes to your products on your online store.

It's actually a very simple process. You can find the codes in the Harmonized Tariff Schedule of the United States (HTSUS), which is available online. The schedule breaks down every product and its corresponding code, so finding the right one for your product is a breeze.

Once you have the code, you just need to add it to your product listing. Many online marketplaces and selling platforms will have a field for you to enter the code. If not, you can always include it in the product description.

Adding HTS codes to your products can seem like a daunting task, but it's actually a very straightforward process that can help improve your business efficiency.

Cross-Checking the Accuracy of Your HTS Codes

Once you've added HTS codes to your products, it's important that you take the time to check the accuracy of your entries. This can be done in several ways, such as by looking up the detailed HS descriptions for each individual tariff code, reviewing the Harmonized Tariff Schedule of the United States (HTSUS), and searching for third-party interpretations of standards.

Cross-checking accuracy is an important step in ensuring that your HTS codes are up-to-date and compliant with international standards. It also ensures that any inaccuracies or changes in your product's classifications are identified and corrected quickly. Additionally, it helps maintain consistency throughout your company by ensuring all products have accurate HTS codes associated with them.

Ensuring the accuracy of this data can minimize the chance of problems at customs checkpoints and ensure that goods are imported into markets without delays or penalties. Taking the time to double-check codes can save time in the long run—and help business operations run more efficiently.

Managing HTS Product Codes With a Database

Wouldn’t it be amazing if you had a single database with all the HTS and HS codes you need for your product? Well, you can make that dream come true with a few steps. By taking the time to create a database of codes and automating the process, you can save yourself time and energy.

To get started, create an inventory list with detailed product descriptions, manufacturer information, and country of origin. Once your list is ready, you can search online to find the correct HTS/HS code for each item. Next, add these codes to your inventory list and store them in an easily-accessible digital format like a spreadsheet.

By automating this process, you’ll have access to up-to-date HTS/HS classifications at any time without spending hours scouring online websites. In addition to saving time, having a central database of classifications helps ensure accuracy and consistency within your organization – making it easier to stay compliant with international standards.

Whether it is a website or a mobile app, maintaining an accurate product list with its corresponding HTS code makes it easy for you to ship products internationally.

Benefits of Using HTS Classifications

Adding HTS codes to your products offers a ton of benefits to your e-commerce business. Firstly, it helps with the traceability and transparency of your products. It also makes it easier for you to access information about how much duty you are paying or what restrictions apply to the product.

HTS codes also enable you to better coordinate with supply chain partners, which makes it easier to accurately report information on your imports and exports. With this data, you can make informed decisions regarding how different trade regulations affect your bottom line.

Finally, using HTS classifications makes it easier for Customs and Border Protection (CBP) agents to assess duties and taxes when shipping goods internationally. This helps reduce the chances of receiving inaccurate assessments or costly delays for shipments that don’t meet all the requirements.

How a mobile app for your online store can help you reach a global audience?

If you already have your HTS codes in place to attract a global audience, consider creating a mobile app for your store. A mobile app helps you communicate to the global audience in their language and in a personalized way. Engage with your audience better with an app. And if you are wondering how easy is it to create a mobile app for your store, try the no-code app builder Swipecart. It uses a visual interface and precoded widgets to get your app design ready in minutes! Add advanced features to reach your target international audience.

There are many other advanced features on Swipecart to help you market your products to global customers on your app.

Conclusion

When it comes to getting your products classified and listed with the right HTS tariff codes, it's important to use the necessary tools to get them right. Your goal for your online business success is customer retention and satisfaction. There are ways to achieve them. It might be through a mobile app for your store or offering discounts on products. One of them is shipping products at the right time. So, be ready with the right HTS code for your product. Get ready to attract a global audience on your mobile app and retain them for the long term!