Home / Blog
Understanding the ABCs of Harmonized System (HS) Codes
Trade Tips

Understanding the ABCs of Harmonized System (HS) Codes

August 6, 2021
Last Updated:
July 23, 2023
5 min read

The Harmonized System or HS Code is a machine-readable worldwide system for classifying goods. ✔️Find out how it can help your business.

Understanding the ABCs of Harmonized System (HS) Codes

Table of Contents

Have you ever wondered what those six numbers on your shipping documents mean?

These numbers, known as Harmonized System (HS) codes, are used to classify products and are necessary for international trade transactions.

Understanding HS codes is essential for shippers of all sizes — from small businesses to enterprise companies — as they provide information on how a product can be imported or exported around the world.

From product description to customs clearance, finding out how to effectively use HS Codes can be challenging, but this blog post is here to help make that process easier and more efficient.

What Is a Harmonized System (HS) Code?

The Harmonized System, adopted in 1988 by the World Customs Organization, is a comprehensive, globally accepted system of classifying materials and products. It is used in more than 212 countries and economies as the basis for their customs tariffs, as well as for the collection of trade statistics.

This unified system helps to ensure that goods are consistently classified and valued across international borders and can be used to quickly identify a product's export and import rules.

HS Code Structure

HS codes have a distinctive structure, with each digit representing a specific category. They can have up to ten digits, where the first six numbers are universal, and the remaining four are specific to individual countries.

With a staggering 5,224 subheadings and 1,244 headings in its 99 chapters across 21 sections, this system covers 98% of goods.

HS codes consist of three parts:

  • Chapters — first two digits representing the basic category of goods
  • Headings — first four digits representing a more detailed category
  • Subheadings — full six digits representing the specific product and containing the most detailed information

For example, the HS code for personal computers is 8471.30, where:

  • 84 (first two digits) — corresponds to the chapter "Nuclear Reactors, Boilers, Machinery And Mechanical Appliances; Parts Thereof"
  • 84.71 (first four digits) — corresponds to the heading "Automatic Data Processing Machines And Units Thereof; Magnetic Or Optical Readers, Machines For Transcribing And Processing Coded Data, Others" of that chapter
  • 8471.30 (full six digits) — corresponds to the subheading "Portable Digital Automatic Data Processing Machines, Weight Not More Than 10 Kg, Consisting Of At Least A Central Processing Unit, Keyboard & A Display" of that heading

HS code example divided into chapter, heading and subheading

When Is an HS Code Required?

HS codes are mandatory for all international shipments. Shipping documents such as commercial invoices, bills of lading, or certificates of origin must include the HS code.

In addition to providing an efficient way to classify and value products, HS Codes also help identify any necessary restrictions or regulations that are specific to goods.

Therefore, it is essential for shippers to ensure the correct HS code is used in all customs documents. Using the wrong HS code can result in delays when shipping goods internationally, as well as higher duties or taxes.

The HS code assists users in determining the following:

  • The applicable tariff for a product.
  • If a product qualifies for duty and/or tax exemption under a preferential tariff regime.
  • If a product is prohibited or in compliance with a country’s trade regulations

How To Find HS Code

The simplest way to find the HS code of a product is to consult an official tariff database. Most countries around the world have their databases, and shippers can use them to look up the correct code for their products.

If in doubt, it’s always best practice to consult with a professional with experience in classifying goods under the Harmonized System. Many organizations such as trade associations or government agencies offer free advice on finding and verifying HS codes, so take advantage of these resources if possible. Additionally, some businesses specialize in customs classification services that can help you determine the best course of action for your particular product or shipment.

Once you have found an appropriate HS code for your product, it is essential to double-check your work before submitting it to Customs. The rules for assigning an HS code vary from country to country, so ensure you are familiar with the regulations that apply in both your country of origin and destination. Additionally, keep in mind that some countries may require additional import documentation beyond just an HS code – be sure to research this beforehand so that everything goes smoothly during transit.

HS Nomenclature 2022

The WCO publishes a new version of the Harmonized System in five-year review cycles. The Contracting Parties of the HS have approved the January 2022 edition that has affected exporters and importers around the world.

Most significantly, 56% of its 351 amendments apply to three sectors: agricultural, food and tobacco; machinery and electrical and electronic goods; and the chemical sectors. As a result, certain products fall under different codes, so it's essential to be aware of these changes before shipping your goods internationally.

The Value of Knowing Your HS Code

HS Codes provide a universal language for describing goods traded internationally which makes them an invaluable tool for exporters, importers, customs agents, and other stakeholders in the global supply chain.

Knowing which codes apply to your products will help simplify paperwork processing with customs authorities and help ensure that your shipments pass through smoothly without any delays caused by misclassification errors on paperwork.

By using Cargoflip's software, you can minimize the risks associated with HS code compliance. If you enter product details once, it will remember the corresponding HS code for all subsequent shipments.

Are you ready to learn more about how Cargoflip can help you simplify your customs paperwork processing? Our team of experts is here to guide you every step of the way — book a demo today.

HS Codes FAQ

What is the difference between the HS code vs. the HTS code?

While HS and HTS codes are used interchangeably, there are subtle differences between them. HS codes are used universally and represent the first six digits, while HTS codes are the tariff codes used by individual countries and represent the full ten digits.

Who is responsible for HTS codes?

The World Customs Organization, or WCO, is responsible for approving and updating HS codes. The WCO publishes a new version of the harmonized system in five-year review cycles.

What products require an HS code?

All goods traded internationally must be classified with an HS code.

What is a commodity description?

A commodity description is a short phrase that details the precise nature of a good and helps further identify it for customs purposes. Commodity descriptions are typically used in conjunction with an HS code to help ensure accurate classification when shipping goods internationally.

Experience Cargoflip: Transform your shipping operations

Real-time tracking and analytics
Seamless integration with your existing systems
Streamlined documentation process
24/7 customer support

Book a demo and enjoy a free trial. Discover the future of logistics today.