15 December 2021 / 0 min read
The Harmonized System (HS) is a system that was developed by the World Customs Organization (WCO) in 1988 to classify goods in shipments entering WCO member countries. Products are classified with HS codes. This means products are given a specific numerical code to allow customs officials the ability to keep track of what items are entering their country.
The main purpose of HS code classification is to assign accurate duty rates to imports and to allow countries the ability to track the type and quantity of goods entering their country. The standard HS code is a universal, six-digit code, and countries add their own digits to the end of the six-digit base to form a country-specific code. The Harmonized System has a schedule to update every five years, and countries can schedule their own code updates as well. That five-year mark has now arrived. Changes begin rolling out in January 2022, and as a seller, you must be aware of the changes you need to make regarding international sales.
You may be asking yourself a lot of questions at this point, but don’t worry. Here’s what this post will cover:
To better understand terms such as “chapter,” “heading,” subheading,” etc., here is an example of a United States HS code for a platinum ring. The image below shows the parts of an HS code and what those parts can represent.
The main changes apply to HS codes in the following chapters:
*common ecommerce goods most likely to affect online retailers
Within these [and other] chapters, there will be new headings and subheadings, updated descriptions, and updated and new legal notes. Essentially, there will be either totally new or partially updated codes for certain goods.
As previously stated, the Harmonized System updates every five years in order to keep up with changes in different industries, goods produced within those industries, and the need for new chapters, headings, and subheadings. The 2022 HS code changes are influenced by multiple driving factors, including the following:
If you have a business that sells products internationally, assume you are affected, especially if your products fall under one or more of the updated chapters, e.g. textiles, furniture, plastics, etc. This post only covers the high-level changes, but there are many individual changes not mentioned here within each of the chapters listed above. It is best practice to stay up to date with the latest version of the Harmonized System, (including the full HS codes for the countries you sell to). This will help you stay compliant and have a smooth international selling experience.
This is a layered question because different countries have their specific codes they use to build on the universal HS code, and these tariff codes are typically updated throughout the year following the Harmonized System updates. Some countries don’t even stay up to date with the Harmonized System changes. The United States, Canada, and the European Union are typically some of the first to update their codes. Essentially, most countries stay relatively up to date and some don’t; either way, there are country-specific codes to take into consideration. A new version of the Harmonized System adds a whole new layer of complexity to the already nuanced subject of HS code classification, but the simple answer is this: Using an outdated HS code or country-specific code is considered an incorrect code. Classifying your products incorrectly can result in the following consequences:
With all of the complicated layers involved with getting HS codes correct for your imports, it can seem impossible to accurately classify all of your products. With the right help, up-to-date product harmonization is both possible and fast.
You can stay compliant by doing the following:
Zonos Classify has changed the industry with automated HS code classification. Using data provided by our in-house team of Global Trade Content Analysts, Classify stays up to date with the changes in the Harmonized System and country-specific classification codes in order to quickly and easily assign accurate HS codes to your products. Zonos Classify generates HS codes upon demand using as little as an item description or image. Classify is available via API or as a web-based tool and allows you to harmonize your entire product catalog. You can also look up the HS codes for your products individually to use for your landed cost quote calculation or if you need a classification in real time within Zonos Dashboard.
A love of bringing words together to create clear, simple messages about complex topics has driven me to pursue a career in professional writing. As the Technical Writer at Zonos, I find excitement and purpose in decoding the complex details of cross-border ecommerce.