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 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
• The difference between HS, HTS, Schedule B, and TARIC codes
• How HS codes can optimise your global trade strategy
• Common HS misclassification 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?

The core of an HS code is a six-digit numeric structure that classifies a product – which can be extended to 8-10 digits to include detailed classifications for tariff and regulatory purposes.

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 code, HTS code, Schedule B code, and TARIC code: What’s the difference?

While the first six digits are globally standardised (HS), some regions extend them to incorporate national tariffs and regulations:

• Harmonized system code: The international 6-digit standard developed by the WCO.
• Harmonized Tariff Schedule (HTS or HTSUS) code: 10-digit version of HS codes for US imports; the first 6 digits match the HS code, while digits 7-10 specify the US tariff line.
• Schedule B code: 10-digit code explicitly used for US export declaration and trade statistics.
• EU TARIC codes: Integrated tariff of the EU with measures like anti-dumping duties, tariff suspensions, and quotas; a 10-digit system which builds on the 6-digit HS code + 2-digit Combined Nomenclature (CN) + 2 more digits for EU-specific regulations.

Why are HS codes important in global trade?

Imagine the complexity if every country had its own product coding – global trade would be chaotic, potentially causing massive trade barriers. HS codes solve that by standardising product categories, simplifying customs clearance, and facilitating smooth international trade.

This universal reference:

• Calculates tariffs and taxes: Customs authorities use HS codes to determine how much duty you pay.
• Clears goods quickly: Right codes prevent delays, rejections, and inspections.
• Enforces regulations: Some items face quotas, anti-dumping measures, or special licenses based on their HS code.
• Informs trade strategy: Knowing your HS codes 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): Many FTAs require correct HS classification for preferential duties. A misclassified shipment can 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). The HS code determines 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 approach. 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 their importance, mistakes in HS code usage can be serious. 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 a Bluetooth speaker under a generic ‘audio equipment’ code instead of the specific ‘loudspeakers’ subheading.

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

Using outdated tariff codes

HS codes are updated every five years to reflect new products and industries.

• If you keep using an old code that has since been deleted or changed, customs authorities may reject your documentation. Stay updated with the latest HS revisions.
• 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 might not be valid on an EU import declaration.
• So, know your target country’s requirements. Use only the 6-digit HS code for general reference, then find the correct additional digits for the extended code to identify the specific country’s tariff schedule.

Choosing ‘cheaper’ codes

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

• If you underpaid duties by using the wrong code, you’ll be liable for the difference, possible fines, and even face confiscation of goods until issues are resolved.
• Always classify per the product’s actual characteristics, not what’s cheapest or easiest. If multiple codes seem to apply, there are rules to resolve it (usually by specificity or essential character – outlined in the General Rules of Interpretation (GRI)).

Failing to exercise reasonable care

Many regions (like the US) put the onus on the importer to ensure proper HS 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 double-check the codes they assign. Implement internal controls, maintain a database of your products and their HS codes, and periodically audit them for accuracy.
• If you’re the exporter, educate your overseas buyers or importers about the correct codes to use on their import paperwork.

Overlooking chapter/section notes

The HS tariff book contains legal notes that clarify classification (e.g., definitions of terms, inclusion/exclusion criteria for categories). Ignoring these and picking a code based only on the headings can lead to errors.

• Always check the notes. For example, if classifying a food preparation, the notes might tell you it belongs in a different chapter despite the name.
• When in doubt, consult the GRI. They provide the framework to classify tricky items. We’ve discussed them below.

Tip: If customs find a 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 – 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 Harmonized System (HS) code is crucial for accurate customs clearance and compliance. Here are some methods to identify the correct HS code for your products:

• Online classification databases: Use tools like the WCO Harmonized System webpage to find the correct HS codes by product name, description, or category.
• Government resources: Check official sources like the customs database for accurate classifications and tariff details.
• 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: If your item is difficult to classify, consult databases like the US CBP’s CROSS (Customs Rulings Online Search System), which has binding rulings on how products are classified. These can guide you to the correct code by identifying how customs interpret similar products.

Global HS Code lookup

Binding rulings: Get customs’ official stamp for HS code

Occasionally, you have a product so new or complex that even the tariff book is unclear. That’s where binding rulings come in:

• 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. The resulting ruling is legally valid for that product.
• In the EU: The system is called Binding Tariff Information (BTI). Member states’ customs authorities can grant an official classification.
• Why do it? For high-volume or high-value products, it’s worth the extra step. With a binding ruling, you’re protected from reclassification surprises and can budget your duties more accurately.

The 6 General Rules of Interpretation (GRI) for HS codes

To classify goods, the Harmonized System relies on six interpretative rules. While often ignored, they’re vital if you’re unsure which code applies:

1. GRI 1: Use the headings, section, and chapter notes as your primary guide.
2. GRI 2: Goods unassembled or incomplete are typically classified as the ‘complete item’ if it has its essential character.
3. GRI 3: If multiple headings could apply, the most specific heading prevails. If that fails, classification is by essential character. If still unclear, the heading last in numerical order applies.
4. GRI 4: If not classifiable under these rules, classify under the heading most akin to the goods.
5. GRI 5: Certain containers or packaging materials may be classified with the goods if they are meant for repeated use.
6. GRI 6: Apply the same rules to subheadings, in numerical order, just as you did for headings.

Why it matters: The GRI helps you systematically handle ambiguous products, composite goods, or sets. If you skip these rules, you risk choosing the wrong code.

Need help navigating HS codes?

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

At Maersk, our customs experts help you decode product classifications, refine existing product catalogues, avoid costly errors, and stay compliant across markets. Explore our Global Trade and Customs Consulting services to simplify your HS code journey with reliable, end-to-end support.