The Harmonized System (HS) code is a standardized numerical method of classifying traded products. It is used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics. The HS code system was developed and is maintained by the World Customs Organization (WCO), and it’s used by more than 200 countries and economies as a basis for their customs tariffs and for international trade statistics.
The HS code consists of six digits, organized into 21 sections, 96 chapters, and thousands of headings and subheadings. These numbers are used to classify goods in a systematic and uniform manner, making international trade more efficient and harmonized. The first two digits of the HS code represent the chapter the goods are classified in, the next two digits identify the heading within that chapter, and the last two digits signify the subheading.
Countries often extend the six-digit HS code with additional digits to further distinguish goods in their own tariff schedules and for domestic purposes, leading to codes that can be up to 10 digits long. For example, the European Union uses an eight-digit code for imports and a ten-digit code for exports, known as the Combined Nomenclature (CN).
HS codes are crucial for international traders as they determine the tariffs applied, the required documentation for import and export, and eligibility for trade agreements. Accurate classification of goods using HS codes is essential to avoid delays in shipping, penalties, or incorrect payment of tariffs.