Learn about HS Codes in this educational blog. What they are, why they are important, and how they changed in 2022.
According to the International Trade Administration 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.
Here is a helpful intro video to begin understanding what an HS Code is and how it affects your products:
One of the first things you should understand about HS Codes is that each code contains 6 digits, which is broken down into 3 separate pairs.
First two digits – Chapter
Second two digits – Heading
Third two digits – Subheading
For example if your HS code is 2004.10
The first 6-digits of an HS code usually stay the same no matter what country you are in. But additional digits can be added to end of the code by individual countries for further classification.
For example in the U.S. we add 4 additional numbers to the end of the HS code to create a 10 digit schedule B number. Schedule B numbers are used solely by the U.S. to help monitor the types of products being exported from the country.
HS Codes are important for a variety of reasons. They are used extensively by governments, the private sector, trade organizations, etc. The code of your product determines applicable overseas duties, taxes & other fees on products.
You can research the HS codes and schedule B numbers of your products at the Bureau of the Census website – http://www.census.gov/foreign-trade/schedules/b/index.html
HS codes are updated every 5 years by the World Customs Organization (WCO). HS 2022 is the seventh edition of the Harmonized System nomenclature and entered into force on January 1, 2022.
The new HS 2022 edition makes some major changes to the Harmonized System with a total of 351 sets of amendments covering a wide range of goods. 77 of those amendments, or 22% of the overall total, are related to the agricultural sector.
Changes to the HS codes are generally made on ‘product streams’. They can either be a result of new and developing impact on international trade, or changes in existing trade patterns which call for more of a focus on tracking.
The 2022 amendments fall into the following high-level categories:
Changes to the HS system often present more work and challenges for importers than exporters. This is because duties and taxes and other tariff treatments are applied, so especially for companies who import a long line of products there can be a lot of reorganizing to do.
If your products have been affected by these recent changes there are a number of steps to take in order to proceed with confidence.
Want to learn more details about the changes to the HS Codes in 2022 and how to prepare for them?
You can access the recording of HS 2022: New Changes to the Harmonized System at this link.
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