How to Find the Right HTS Code Duty Rate for Your Products

If you are importing or exporting products, you need to know the Harmonized Tariff Schedule (HTS) code and the duty rate for each item. The HTS code is a 10-digit number that identifies the product category and subcategory, and the duty rate is the percentage of the value that you have to pay as a tax to the customs authority. But how do you find the right HTS code and duty rate for your products? Here are some steps to follow:

1. Use the HTS Search Tool

The easiest way to find the HTS code and duty rate for your products is to use the online HTS Search Tool provided by the U.S. International Trade Commission. You can enter a keyword, a description, or a partial HTS code, and the tool will show you a list of matching results. You can also browse the HTS chapters and headings to find the appropriate code.

2. Check the General Rules of Interpretation (GRI)

The GRI are a set of rules that explain how to classify products according to the HTS. They are based on common sense and logic, and they help you determine which heading or subheading applies to your product. For example, GRI 1 states that you should classify your product according to its essential character or function, and GRI 6 states that you should use the most specific subheading available.

3. Refer to the Section and Chapter Notes

The HTS is divided into 22 sections and 99 chapters, each with its own notes that provide additional guidance on how to classify products. The section notes apply to all chapters within that section, and the chapter notes apply to all headings and subheadings within that chapter. You should read these notes carefully and follow any exceptions or exclusions that they mention.

4. Consult the Explanatory Notes

The Explanatory Notes are an official commentary on the HTS, published by the World Customs Organization (WCO). They provide detailed explanations and examples of how to interpret and apply the HTS codes, as well as illustrations and diagrams of various products. The Explanatory Notes are not legally binding, but they are widely accepted as an authoritative source of information.

5. Contact a Customs Broker or Specialist

If you are still unsure about how to find the right HTS code and duty rate for your products, you can seek professional help from a customs broker or specialist. They have the expertise and experience to handle complex classification issues and ensure compliance with customs regulations. They can also help you with other aspects of international trade, such as documentation, valuation, and clearance.

Finding the right HTS code and duty rate for your products is essential for avoiding delays, penalties, and extra costs when importing or exporting goods. By following these steps, you can ensure that you pay the correct amount of duty and avoid any problems with customs authorities.

The Impact of HTS Code Duty Rate on Global Demand for Goods

HTS code duty rate is the tariff rate that applies to goods imported into the United States based on their Harmonized Tariff Schedule (HTS) classification. The HTS is a reference manual that lists the duty rates and statistical categories for virtually every item that exists, based on the international Harmonized System of nomenclature . The HTS code duty rate can affect the global demand for goods by influencing their price, competitiveness, and availability in the US market. In this blog post, we will examine how the HTS code duty rate has changed over time and how it has impacted the global demand for some industries.

The Evolution of HTS Code Duty Rate

The HTS code duty rate is not fixed, but rather changes according to various factors, such as trade agreements, trade disputes, trade preferences, and trade remedies. For example, the United States has entered into several free trade agreements (FTAs) with other countries, such as Canada, Mexico, Chile, Singapore, Australia, and Morocco, that reduce or eliminate the duty rates for certain goods originating from those countries . On the other hand, the United States has also imposed higher duty rates on some goods from certain countries, such as China, Russia, and Belarus, as a result of trade disputes or legal actions relating to unfair trade practices or national security concerns . Additionally, the United States grants preferential duty rates to some goods from developing countries or regions under programs such as the Generalized System of Preferences (GSP), the Caribbean Basin Economic Recovery Act (CBERA), and the African Growth and Opportunity Act (AGOA) . Furthermore, the United States applies trade remedies, such as antidumping or countervailing duties, to some goods from certain countries that are found to be sold at less than fair value or subsidized by foreign governments .

The HTS code duty rate can vary significantly depending on the product and its country of origin. For example, using our example of footballs and the current list of US HTS Codes, there would be a big difference between reporting your pallet of footballs as 9506.62.40 (Inflatable balls – footballs and soccer balls), which can be imported duty free and reporting it as 9506.62.80 (Inflatable balls – other), for which you would pay a 4.8% import tax . Similarly, there would be a difference between importing footballs from China, which are subject to an additional 7.5% tariff under Section 301 of the Trade Act of 1974 , and importing footballs from Morocco, which are eligible for duty-free treatment under the US-Morocco FTA .

The Effect of HTS Code Duty Rate on Global Demand

The HTS code duty rate can have a significant effect on the global demand for goods by affecting their price, competitiveness, and availability in the US market. The US market is one of the largest and most lucrative markets in the world, accounting for about 16% of global imports in 2020 . Therefore, any changes in the HTS code duty rate can have ripple effects on the global supply and demand of goods.

Generally speaking, a lower HTS code duty rate can increase the global demand for goods by making them cheaper, more competitive, and more available in the US market. Conversely, a higher HTS code duty rate can decrease the global demand for goods by making them more expensive, less competitive, and less available in the US market. However, the effect of HTS code duty rate on global demand can also depend on other factors, such as the elasticity of demand, the availability of substitutes, and the market structure.

For example, a lower HTS code duty rate can increase the global demand for goods that have a high elasticity of demand, meaning that consumers are sensitive to changes in price and will buy more when the price goes down. This can be the case for non-essential or luxury goods, such as jewelry, clothing, or electronics. On the other hand, a lower HTS code duty rate may not have much effect on the global demand for goods that have a low elasticity of demand, meaning that consumers are not sensitive to changes in price and will buy roughly the same amount regardless of price changes. This can be the case for essential or basic goods, such as food, medicine, or fuel.

Similarly, a higher HTS code duty rate can decrease the global demand for goods that have a high elasticity of demand, meaning that consumers will buy less when the price goes up. This can be the case for non-essential or luxury goods, such as jewelry, clothing, or electronics. On the other hand, a higher HTS code duty rate may not have much effect on the global demand for goods that have a low elasticity of demand, meaning that consumers will buy roughly the same amount regardless of price changes. This can be the case for essential or basic goods, such as food, medicine, or fuel.

Moreover, a lower HTS code duty rate can increase the global demand for goods that have few or no substitutes in the US market, meaning that consumers have limited or no options to switch to other products that can satisfy their needs or preferences. This can be the case for unique or specialized goods, such as patented drugs, rare minerals, or cultural products. On the other hand, a lower HTS code duty rate may not have much effect on the global demand for goods that have many or close substitutes in the US market, meaning that consumers have many or similar options to switch to other products that can satisfy their needs or preferences. This can be the case for generic or common goods, such as sugar, cotton, or steel.

Furthermore, a higher HTS code duty rate can decrease the global demand for goods that have few or no substitutes in the US market, meaning that consumers have limited or no options to switch to other products that can satisfy their needs or preferences. This can be the case for unique or specialized goods, such as patented drugs, rare minerals, or cultural products. On the other hand, a higher HTS code duty rate may not have much effect on the global demand for goods that have many or close substitutes in the US market, meaning that consumers have many or similar options to switch to other products that can satisfy their needs or preferences. This can be the case for generic or common goods, such as sugar, cotton, or steel.

Additionally, a lower HTS code duty rate can increase the global demand for goods that are produced in a competitive market, meaning that there are many sellers and buyers and no one has significant market power. This can be the case for homogeneous or standardized goods, such as wheat, corn, or oil. On the other hand, a lower HTS code duty rate may not have much effect on the global demand for goods that are produced in a monopolistic or oligopolistic market, meaning that there are few sellers and buyers and some have significant market power. This can be the case for differentiated or branded goods, such as smartphones, cars, or cosmetics.

Conversely, a higher HTS code duty rate can decrease the global demand for goods that are produced in a competitive market, meaning that there are many sellers and buyers and no one has significant market power. This can be the case for homogeneous or standardized goods, such as wheat, corn, or oil. On the other hand, a higher HTS code duty rate may not have much effect on the global demand for goods that are produced in a monopolistic or oligopolistic market, meaning that there are few sellers and buyers and some have significant market power. This can be the case for differentiated or branded goods, such as smartphones, cars, or cosmetics.

HTS code duty rate is an important factor that influences the global demand for goods by affecting their price, competitiveness, and availability in the US market. The HTS code duty rate is not fixed, but rather changes according to various factors, such as trade agreements, trade disputes, trade preferences, and trade remedies. The effect of HTS code duty rate on global demand can vary depending on the product and its country of origin, as well as other factors, such as the elasticity of demand, the availability of substitutes, and the market structure. Therefore, it is important for importers and exporters to keep track of the changes in HTS code duty rate and understand how they affect their business opportunities and challenges.

References:

http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx

http://www.wcoomd.org/en/about-us/wco-members/membership.aspx

https://hts.usitc.gov/
https://hts.usitc.gov/view/General%20Notes
https://hts.usitc.gov/view/Notices
https://www.cbp.gov/trade/trade-remedies
https://www.ups.com/us/en/supplychain/logistics-solutions/customs-brokerage/importers-guide-to-hts-codes.page
https://www.wto.org/english/res_e/statis_e/wts2021_e/wts2021_e.pdf

https://hts.usitc.gov/

https://www.cbp.gov/trade/reference/gri