Importing Basics: Tariff Classification

Tariff classification and country of origin determine the rate of duty assessed on imported merchandise. The value and/or quantity of the imported merchandise determine the amount of duty owed. Reporting incorrect classification, origin, value or quantity data is a violation of United States Customs law, whether or not the inaccuracy affects the duty rate or amount owed.

Every article of merchandise imported into the United States must be categorized into one of thousands of classification subheadings identified in the Harmonized Tariff of the United States (HTSUS). Tariff classification is the process of determining the correct subheading for a particular item. Reporting an incorrect HTSUS classification for imported merchandise is a common violation of U.S. Customs law.

The classification procedure can be difficult and complicated. Correctly applying the HTSUS rules of interpretation may result in a different classification than common sense would indicate. A subheading may seem to describe a product, but the rules of interpretation place it elsewhere. Also, several classifications may equally describe one article.

The HTSUS is based on the same structure as the tariffs used by most U.S. trading partners. However, there are important differences. The “Harmonized Code” number that the shipper provides on the foreign export documentation may not be the correct HTSUS classification.

Generally, the more complex the imported article, the greater the risk of incorrectly classifying it. Special programs, trade agreements and quota will also affect the HTSUS classification. Importers should consult Customs “experts” to assist in the classification process.

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