How to Import Goods Using HS Codes and Pay Custom Duties

If you are planning to import goods from another country, you need to know how to use the Harmonized System (HS) codes and pay the appropriate custom duties. HS codes are an international standard for identifying and classifying products that are traded across borders. They help customs authorities to determine the origin, value, and tariff rates of the imported goods. Here are some steps to follow when importing goods using HS codes and paying custom duties.

1. Find out the HS code of your product

You can use online tools such as the U.S. International Trade Commission-Tariff Database or IncoDocs to search for the HS code of your product based on its description, name, or category. The HS code has a minimum of 6 digits and can be up to 10 digits long, depending on the level of detail and the country of import. For example, the HS code for fresh apples is 0808.10, but it can be further specified as 0808.10.10 for apples from Canada or 0808.10.90 for apples from other countries.

2. Check the tariff rate of your product in the destination country

You can use online tools such as Wise or Trade Map to find out the tariff rate of your product in the destination country based on its HS code. The tariff rate is the percentage of the value of the product that you have to pay as a tax to the customs authority of the destination country. For example, if you want to import fresh apples from Canada to the U.S., you have to pay a tariff rate of 0%, but if you want to import fresh apples from China to the U.S., you have to pay a tariff rate of 15%.

3. Calculate the landed cost of your product

The landed cost is the total cost of importing your product, including the product price, freight, insurance, and custom duties. You can use online tools such as IncoDocs or SimplyDuty to calculate the landed cost of your product based on its HS code, value, origin, destination, and shipping method. For example, if you want to import 100 kg of fresh apples from Canada to the U.S., with a product price of $200, a freight cost of $50, an insurance cost of $10, and a tariff rate of 0%, your landed cost would be $260.

4. Prepare the necessary documents for customs clearance

You will need to provide some documents to prove the origin, value, and description of your product to the customs authority of the destination country. Some of the common documents required for customs clearance are:

Commercial invoice: A document that shows the seller’s name and address, the buyer’s name and address, the date and terms of sale, the HS code, the quantity and value of the product, and any discounts or charges.

Packing list: A document that shows the weight, dimensions, and contents of each package in the shipment.

Bill of lading: A document that shows the details of the shipment, such as the carrier’s name and address, the shipper’s name and address, the consignee’s name and address, the port of loading and discharge, the date of departure and arrival, and any special instructions.

Certificate of origin: A document that shows where the product was made or grown, and that it meets any preferential trade agreements between the origin and destination countries.

Other documents: Depending on the type and origin of your product, you may need other documents such as a phytosanitary certificate (for plants or plant products), a veterinary certificate (for animals or animal products), or a license or permit (for restricted or regulated products).

5. Pay the custom duties and receive your product

Once your product arrives at the destination country, you will need to pay the custom duties to the customs authority before you can receive your product. You can pay online using electronic payment systems such as ACE in the U.S., or through a customs broker who can handle all aspects of customs clearance for you. After paying the custom duties, you will receive a release notice from the customs authority that allows you to collect your product from the port or warehouse.

By following these steps, you can import goods using HS codes and pay custom duties without any hassle. However, keep in mind that importing goods involves many rules and regulations that may vary depending on your product and destination country. Therefore, it is advisable to consult with a professional customs broker or an international trade specialist before importing goods.

HS Code Custom Duty: Trends and Implications

HS code, or harmonized system code, is a standardized nomenclature for classifying products in international trade. It is used by customs authorities around the world to determine the tariff rates and statistical categories for all merchandise imported or exported. The HS code has a minimum of 6 digits and can be up to 10 digits long, depending on the level of specificity required by each country.

In this blog post, we will analyze three aspects of HS code custom duty that show the increase or decrease of global demand in this industry: the changes in tariff rates, the trade volume and value, and the impact of trade agreements.

Changes in Tariff Rates

One way to measure the global demand for HS code custom duty is to look at the changes in tariff rates over time. Tariff rates are the taxes imposed by a country on imported goods, which affect the price and competitiveness of those goods in the domestic market. Generally speaking, lower tariff rates indicate higher demand for imported goods, while higher tariff rates indicate lower demand or protectionism.

According to the World Trade Organization (WTO), the average applied tariff rate for all products in 2019 was 7.5%, down from 8.6% in 2010. However, this average masks significant variations across regions and product categories. For example, the average tariff rate for agricultural products was 15.2%, while that for non-agricultural products was 6.3%. Similarly, the average tariff rate for Africa was 12.5%, while that for Europe was 4.1%.

The changes in tariff rates also reflect the trade tensions and disputes among major economies in recent years. For instance, the United States imposed additional tariffs on $550 billion worth of Chinese imports under Section 301 of the Trade Act of 1974, while China retaliated with tariffs on $185 billion worth of US imports. The US also imposed tariffs on steel and aluminum imports from various countries under Section 232 of the Trade Expansion Act of 1962, while those countries responded with countermeasures. These actions have increased the uncertainty and costs of international trade, and reduced the demand for HS code custom duty.

Trade Volume and Value

Another way to measure the global demand for HS code custom duty is to look at the trade volume and value of goods classified by HS codes. Trade volume refers to the quantity or weight of goods traded, while trade value refers to the monetary worth of goods traded. Both indicators can show the trends and patterns of global trade flows and demand.

According to the United Nations Comtrade database, the total trade volume of goods in 2019 was 19.7 billion tonnes, up from 16.4 billion tonnes in 2010. The total trade value of goods in 2019 was $18.9 trillion, down from $19.3 trillion in 2010. The difference between the growth rates of trade volume and value suggests that the prices of traded goods have declined over time, due to factors such as technological innovation, competition, and lower tariffs.

The Comtrade database also provides detailed data on trade volume and value by HS codes at various levels of aggregation. For example, we can see that the most traded HS code at the 2-digit level in 2019 was HS code 27 (mineral fuels, oils and products of their distillation), with a trade volume of 4.4 billion tonnes and a trade value of $2.5 trillion. The least traded HS code at the 2-digit level in 2019 was HS code 14 (vegetable plaiting materials; vegetable products not elsewhere specified or included), with a trade volume of 1.6 million tonnes and a trade value of $1.3 billion.

By analyzing the data by HS codes, we can identify which products have high or low demand in global markets, and how they are affected by factors such as supply and demand, price fluctuations, quality standards, consumer preferences, and environmental regulations.

Impact of Trade Agreements

A third way to measure the global demand for HS code custom duty is to look at the impact of trade agreements on trade flows and tariffs. Trade agreements are treaties or arrangements between two or more countries that aim to facilitate trade by reducing or eliminating barriers such as tariffs, quotas, subsidies, regulations, and non-tariff measures. Trade agreements can create new opportunities and challenges for traders who use HS code custom duty.

According to the WTO, there are currently 305 regional trade agreements (RTAs) in force around the world, covering more than half of global trade. Some examples of RTAs are the European Union (EU), the North American Free Trade Agreement (NAFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the African Continental Free Trade Area (AfCFTA). These RTAs often have different rules of origin, tariff schedules, and product coverage for HS code custom duty, which can affect the trade preferences and competitiveness of different products and countries.

For instance, the EU has a common external tariff (CET) for goods imported from non-EU countries, which varies by HS code and country of origin. The EU also has preferential trade arrangements with various countries and regions, such as the Generalized System of Preferences (GSP), the Economic Partnership Agreements (EPAs), and the Free Trade Agreements (FTAs), which grant lower or zero tariffs for certain products and countries. Therefore, traders who use HS code custom duty need to be aware of the different tariff rates and rules of origin that apply to their products in the EU market.

In conclusion, HS code custom duty is a key element of international trade that reflects the global demand for different products and industries. By analyzing the changes in tariff rates, the trade volume and value, and the impact of trade agreements, we can gain insights into the trends and patterns of global trade flows and demand. However, HS code custom duty is also subject to various factors and uncertainties that can affect its accuracy and reliability, such as data quality, classification disputes, tariff modifications, and trade disputes. Therefore, traders who use HS code custom duty need to be vigilant and adaptable to the changing dynamics of international trade.

References:

http://www.cbp.gov/linkhandler/cgov/newsroom/publications/trade/iius.ctt/iius.pdf

https://www.wto.org/english/res_e/booksp_e/tariff_profiles19_e.pdf

https://comtrade.un.org/
https://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=en

https://hts.usitc.gov/
https://help.incodocs.com/en/articles/2106707-how-to-find-hs-codes-and-calculate-import-duties-taxes-and-landed-costs
https://wise.com/us/import-duty/hs-code
https://www.trademap.org/
https://www.simplyduty.com/import-calculator/
https://www.cbp.gov/trade/automated