Think HS codes are just for customs? Think again. Your chosen HS code can impact your freight shipping costs, determine your product’s eligibility for preferential duty rates under free trade agreements, and even affect your cash flow due to unexpected duties. This guide helps you find, apply, and leverage HS codes for smarter international trade. Up ahead, we’ll explore:

• What HS codes are and how they work
• How HS codes differ from national and regional tariff systems
• How the correct use of HS codes can optimise your global trade strategy
• Common HS classification mistakes (and how to avoid them)
• How you can find the correct HS code for your product

What are HS codes? How do they work?

Harmonized System (HS) codes are numerical identifiers assigned to goods for international trade classification. Developed and managed by the World Customs Organization (WCO), HS codes are used by 200+ countries – ensuring uniformity in tariffs, trade statistics, and regulatory requirements.

HS code structure: How do HS codes work?

HS codes are 6-digit numbers used worldwide to classify over 5,000 groups of goods. These codes are standardised across all countries that use the Harmonized System. The full list of these product categories with their corresponding codes and rules that govern the classification is called the HS Nomenclature.

Many countries expand the codes by adding extra digits – usually 8 or more – to apply national rules, taxes, or reporting requirements.

Let’s understand this with an example: 7009.10 is the HS code for Rear-view mirrors for vehicles. Some classifications may extend beyond six digits to accommodate region-specific variations.

HS codes vs national or regional tariff systems: What’s the difference?

While the first six digits are globally standardised (HS), in most tariffs they are further subdivided to incorporate national or regional codes beyond the six-digit level, for instance:

• Harmonized Tariff Schedule (HTS or HTSUS) code: Numerical codes used to classify all commodities imported into the US, with their corresponding statistical categories and duty rates. The first 6 digits match the respective HS codes, while digits 7–10 are specific to US rules and duties (with some exceptions).
• Schedule B code: 10-digit codes used to declare goods exported from the US and to compile trade statistics. Like in the HTS, the first six digits here also align with the HS code.
• EU TARIC codes: TARIC stands for the Integrated Tariff of the European Union. It uses a 10-digit format for codes: six digits from the HS, two from the EU’s Combined Nomenclature (CN), and two more for EU-specific trade measures like anti-dumping duties or quotas.

Why are HS codes important in global trade?

Imagine the complexity if every country had its own product coding system; global trade would face massive barriers as there would be no common rules on how to describe and tax commodities crossing borders – creating a lot of extra work, uncertainties, delays, and costs. HS codes solve that by standardising product categories, simplifying customs clearance, and facilitating the smooth flow of international trade.

A true common language of international trade, the Harmonized System helps:

• Calculates tariffs and taxes: Customs authorities use HS-based codes to determine how much duty you pay.
• Clears goods quickly: Accurate codes prevent delays, rejections, and unnecessary inspections.
• Enforces regulations: Some items face quotas, anti-dumping measures, or special licenses based on their HS code.
• Informs trade strategy: Knowing HS codes for your products can help you leverage free trade agreements or avoid compliance pitfalls.

HS codes and Global Trade Strategy (GTS)

Many businesses see HS codes as nothing more than a compliance requirement – not realising that a careful HS classification strategy can optimise their supply chain and reduce logistics costs through:

• Free trade agreements (FTAs): In many FTAs, the eligibility of products for preferential tariff treatment (duty-free or reduced duties) is expressed through HS codes. A misclassified shipment can thus forfeit potential tariff savings. Conversely, accurate HS codes can unlock significant cost reductions.
• Regulatory compliance and avoiding trade barriers: Some items are restricted or need special permits (e.g., dual-use or dangerous goods). HS codes determine if an item is subject to extra measures.
• Cost and supply chain optimisation: Classifying items correctly can reduce duty rates or clarify your supply chain strategy. For example, just-in-time shipments rely on air freight, and your codes determine whether specific import controls might slow clearance.

What happens if you use the wrong HS code?

Given the importance of HS codes, mistakes in their usage can have serious repercussions. A single wrong digit in your HS code could mean the difference between smooth clearance and costly penalties. Here are some common pitfalls and how to avoid them.

Misclassification of products

This can happen due to guesswork, such as assuming a code based on an item’s name. For instance, classifying an item described as “Bluetooth speaker”, which has a radio-broadcast receiver, as a loudspeaker (heading 85.18) rather than as radio-broadcasting apparatus (heading 85.27).

• Consequences can include wrong duty rates (overpay or underpay) and potential customs penalties. Customs authorities typically consider incorrect classification a violation; misclassification can be deemed as customs fraud and lead to sanctions.
• To avoid this, take time to research the right code. Use the correct classification tools or seek expert assistance if in doubt.

Using outdated tariff codes

HS codes are usually updated every five years to reflect new products, emerging industries, and evolution of global trade flows.

• If you keep using an old code that has since been deleted or changed, customs authorities will reject your declaration. Stay updated with the latest HS version.
• For example, as of 2022, new codes exist for drones (heading 88.06) and smartphones (subheading 8517.13). Regularly check updates from the WCO or relevant country’s customs authority.

Applying a national code to other countries or regions

A common mistake is to use a national code for another country’s shipment. Remember, only the first 6 digits are universal. Beyond that, countries add their own digits.

• For example, a US 10-digit HTS code is likely to be invalid for an EU import declaration.
• So, know your target country’s requirements. Use HS 6-digit codes for general reference, then find the correct national (or regional) tariff to identify the specific country’s code at origin and destination when declaring your goods to customs.

Choosing ‘cheaper’ codes

Some importers might intentionally choose a code with a lower duty rate – or a broad ‘parts’ code, or a residual “other” code – to simplify things, even if it’s inaccurate. This is risky as customs can detect mismatches.

• If you underpay duties by using a wrong code, you’ll be liable for the difference, possible fines, and even face confiscation of goods until issues are resolved.
• Always classify per products’ actual characteristics, without trying to go for the lowest duty or easiest option. If multiple codes seem to apply, there are rules to resolve such situations (known as General Rules for the interpretation of the Harmonized System, usually abbreviated as GIRs or GRIs)

Failing to exercise reasonable care

Many regions (like the US) put the onus on the importer to ensure proper commodity classification. Relying on customs brokers without providing product details can lead to errors.

• Work closely with your logistics partners. Give them accurate product specifications and make sure they have the required expertise to correctly classify your products if you rely on them to do that for you. Implement internal controls, maintain a database of your products and their HS codes, own your data, and periodically audit your commodity codes for accuracy.
• If you’re an exporter, educate your overseas buyers or importers about the correct codes to use for their import paperwork.

Overlooking Chapter/Section Notes

The HS Nomenclature includes legal notes that explain how items should be classified, such as definitions and what’s included in or excluded from certain categories. Skipping these notes and choosing a code based only on the heading’s wording can easily lead to mistakes.

• Always check the legal notes. For example, when classifying a food preparation, the notes may indicate that it belongs in a different chapter than expected – based on specific rules that aren’t always obvious from the product name or common sense alone.
• Always use the GIRs. The six General Rules for the Interpretation of the HS provide the legal framework for HS classification. They guide how to apply codes consistently – including for complex cases involving mixtures, multi-component goods, or sets for retail sale. Skipping these rules can lead to misclassification and compliance issues. You can find the latest version of the six GIRs and full HS Nomenclature on the WCO website.

Tip: If customs find a case of misclassification, penalties can range from monetary fines to more severe actions. Financial penalties can erode your profit margins, and repeat or egregious offences can revoke import privileges. Always respond promptly if customs enquire about a classification case – often, they’ll give you a chance to justify or correct a code before issuing penalties.

How to choose the right HS code for shipping?

Finding the correct commodity code is crucial for optimised customs clearance and compliance. Here are some sources to help you identify the correct HS code for your products:

• Online classification databases: Use tools like the WCO Harmonized System Trade Tools to find the correct HS codes by product name, description, or category.
• Government resources: Check official sources like the customs databases and tariff portals for detailed tariff information, as well as advance ruling databases. The latter contain published decisions by customs authorities on how specific products have been classified in the past. These can provide useful guidance for similar goods.
• Customs brokers: Work with experts specialising in product classification to avoid misclassification and penalties. Maersk Customs Services can simplify classification, helping you avoid costly mistakes and ensuring smooth global shipping.

Tip: Consult databases like the US CBP’s CROSS (Customs Rulings Online Search System), which has binding rulings on individual products classified by the customs administration. These can guide you to the correct code by identifying how customs interpret similar products.

Global HS Code lookup tool examples

Binding rulings: Get customs’ official stamp for HS code

If you're still unsure about how to classify your product, binding tariff rulings can help. These are official decisions issued by a customs authority that are legally binding for the specific product and the applicant involved.

• In the US: You can request a binding ruling from CBP (Customs and Border Protection), providing product details, samples, and justification of the proposed code.
• In the EU: The system is called Binding Tariff Information (BTI). Member states’ customs authorities issue a ruling (BTI) to the applicant, which is valid for a specified period across the whole territory of the EU.
• Why do it? With a binding ruling, you’re protected from classification surprises and can budget your duties more accurately, with complete certainty and predictability.

Need help navigating commodity codes?

Beyond customs clearance, commodity codes shape how efficiently and profitably you trade across borders. Set in a rapidly changing legislative landscape around the world, even a single error in the application of classification rules can impact your ability to clear customs and calculate true landed costs.

At Maersk, our customs experts help you classify your products in a correct, consistent, and optimised way, refine existing product catalogues, avoid costly errors, and stay compliant across markets. Explore our Global Trade and Customs Consulting services to simplify your commodity code journey with reliable, end-to-end support, all the way.