Shipping products across borders? You’ll need an HS code to classify the goods, prevent delays, and pay the right tariffs.
What Are HS Codes?
HS codes, or Harmonised System codes, are a set of internationally recognised numbers that classify products for trade. They help customs authorities apply the right tariffs, follow trade regulations, and keep imports and exports running smoothly.
What Is the Harmonised System?
The Harmonised System (HS) is a globally standardised system for classifying goods. It is a way for customs authorities to identify what’s being shipped and apply the correct taxes, tariffs, or trade restrictions. Think of it as a universal language for trade that makes sure that products are labelled consistently regardless of the country.
The first two digits represent the general category, while the full six-digit code provides a more detailed classification. So, for example, all products that fall under electrical machinery will have an HS code that starts with 85, but the specific six-digit HS code 850110 refers to electric motors with an output not exceeding 37.5 watts. Each additional number drills deeper into the item's specifics. Beyond those six digits, different countries may add extra numbers for even more precise product identification and tariff regulations, which we’ll cover in further detail later in this guide.
When Was the Harmonised System Introduced?
The World Customs Organization (WCO) introduced the system in 1988 to streamline international trade. Since then, more than 200 countries have adopted it, using a shared six-digit structure to classify goods. The system is reviewed and updated every five years to reflect changes in technology, materials, and industry needs.
Why Are HS Codes Important?
An HS code acts as a product’s passport for international trade. It ensures:
- Customs authorities know exactly what’s being shipped.
- Correct duties and taxes are applied to imported and exported goods.
- Trade regulations (such as import bans or quota restrictions) can be consistently enforced.
How Does the Harmonised System Apply to Manufacturing in Europe?
HS codes do more than just classify products—they shape how manufacturers source materials, calculate costs, and follow trade rules. Countries with lower tariffs on raw materials tend to attract more business, influencing supply chain decisions. At the same time, using the right HS code ensures customs clearance, accurate import duties, and compliance with EU trade laws.
Why Manufacturers Need HS Codes
Whether you're sourcing raw materials or shipping finished goods, the right HS code can mean the difference between smooth operations and having your shipment stuck in customs limbo.
- Cost planning: HS codes determine tariffs and import duties for raw materials and finished goods, directly impacting pricing and sourcing.
- Regulatory compliance: Getting the HS code right means avoiding customs problems, fines, and compliance issues when shipping across borders.
- Supply chain management: Standardised classification makes it easier to track materials and components across suppliers and production sites.
- Trade agreements: Many free trade agreements (FTAs) rely on HS codes to decide if a product qualifies for reduced tariffs, or even no tariffs, helping businesses cut costs.
For manufacturers with global supply chains, keeping HS codes consistent across suppliers is key. A mismatch or incorrect classification can lead to surprise tariffs, compliance issues, and shipment delays—all of which add time and costs to your project. And nobody wants that.
What Are the Differences in HS Codes by Region?
Every product receives an HS code with a six-digit base that remains the same worldwide. However, beyond those six digits, different countries and regions add their own additional numeric codes to meet their specific needs.
- European Union (EU): The EU extends HS codes by adding two extra digits, creating an 8-digit Combined Nomenclature (CN) code. These codes help further define goods for customs duties, trade statistics, and regulatory compliance across the EU. The CN codes are reviewed annually to reflect economic and technological changes.
- United Kingdom (UK): After Brexit, the UK adopted the UK Global Tariff (UKGT), which also extends HS codes to 8 digits. While structurally similar to the EU’s CN codes, the UKGT has different tariff rates, product classifications, and regulatory adjustments that align with post-Brexit trade policies. Businesses trading between the UK and EU need to check both systems.
- United States (US): The U.S. expands HS codes to 10 digits under the Harmonized Tariff Schedule (HTS), offering even greater classification detail. The additional four digits help determine import duties, trade restrictions, and eligibility for tariff exemptions under agreements like USMCA. HTS codes are maintained by the U.S. International Trade Commission (USITC) and are updated regularly to reflect policy changes.
HS Code Extensions By Region
|
Region |
System |
Code Length |
Purpose |
Resource |
|
European Union (EU) |
Combined Nomenclature (CN) |
8 digits |
Defines goods more precisely for tariff purposes |
|
|
United Kingdom (UK) |
UK Global Tariff (UKGT) |
8 digits |
Similar to EU CN codes but with post-Brexit differences |
|
|
United States |
Harmonized Tariff Schedule (HTS) |
10 digits |
Provides more detailed classifications for U.S. trade regulations |
|
|
China |
Customs Tariff of the People's Republic of China |
10 digits |
Sets country-specific tariffs and import restrictions |
|
|
Australia |
Australian Harmonized Export Commodity Classification (AHECC) |
8 digits |
Used for classifying goods for export |
|
|
New Zealand |
New Zealand Harmonised System Classification |
8 digits |
Used for tariff and statistical purposes |
|
|
India |
Indian Trade Classification (ITC-HS) |
8 digits |
Specific to India's import and export policies |
Do Changes to Global Tariffs Impact HS Codes?
While tariffs can change frequently due to shifting trade policies, HS codes themselves are relatively stable. The World Customs Organization (WCO) updates HS codes every five years to account for emerging industries, new materials, and technological advancements. However, changes in import/export duties, trade wars, or economic sanctions can impact the tariff rates applied to specific HS codes. For example:
- A country may increase tariffs on a product category without changing its HS code.
- Some nations may classify products differently, leading to disputes in customs clearance.
- Trade agreements can lower or eliminate tariffs on certain HS-coded products.
Keep an eye on both HS code updates and tariff changes to ensure compliance and avoid unexpected costs when shipping internationally.
How Are HS Codes Used for Shipping Products?
HS codes are essential for international shipping and must be included in customs documentation. When shipping goods, the HS code is typically printed on the commercial invoice, packing list, and customs declaration forms. Some countries also require the HS code to be displayed on the shipping label or outside of the package for easier inspection at customs checkpoints.
Why Do I Need an HS Code to Ship a Product?
International shipments require an HS code to determine the correct import duties, trade restrictions, and necessary documentation before allowing a shipment to proceed. If a product is misclassified, it may be held for inspection, reassessed for higher duties, or even rejected. Some trade agreements and customs procedures also use HS codes to decide whether a shipment qualifies for lower tariffs or exemptions.
Do I Need an HS Code for Domestic Shipping?
No, HS codes are only required for international trade, but some countries use them for domestic tax classifications, such as VAT in the EU or GST in India.
How Do I Find Out Which HS Code to Use?
Finding the right HS code is a critical first step. Here’s how to do it:
-
Use official tools: The EU TARIC database and the UK Trade Tariff tool help businesses find the correct HS code for their products. For customers in the US, refer to the website of the US International Trade Commission.
-
Search online: Many government websites provide HS code lookup features where you can enter a product description.
-
Check with your company’s logistics department or seek the advice of customs or trade experts. If you’re unsure, consult with a professional to avoid classification errors.
FAQs About the Harmonised System
Can a product have multiple HS codes?
Yes, some products can be classified under multiple HS codes, depending on their intended use, composition, or function. Customs authorities make the final decision in cases of dispute.
Do HS codes change?
Yes, the WCO updates the HS system every five years to account for technological advancements and new products. Businesses should check for updates to avoid misclassification.
What happens if I use the wrong HS code?
Incorrect HS codes can lead to higher tariffs, customs delays, penalties, or even legal action. Always verify your code before shipping.
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