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What is a Tariff Code?

Tariff code is used by importers and exporters to track the volume of products sold.
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  • Written By: Nicholas K.
  • Edited By: A. Joseph
  • Last Modified Date: 13 December 2014
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A tariff code is a number assigned to each type of product sold internationally. Each tariff code is issued by the World Customs Organization (WCO) through a database called the Harmonized System. The number of digits for each product ranges from six digits for common products to 10 digits for niche items. The Harmonized System features 21 sections and 96 chapters of product codes that must be used by WCO members to stay compliant with trade policies. Tariff codes are used for taxation, customs and statistical purposes by WCO member countries.

The WCO was created in 1947 to address bureaucratic barriers to international trade. This organization established the Harmonized System during the Harmonized System Convention in 1983. A new system of tariff codes was implemented in 1988 by 176 member countries. These codes make it easier for national governments to apply trade taxes or tariffs on products from other nations. The WCO has integrated tariff codes into additional policies on trade harmonization, customs integrity and economic security.

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Each tariff code can be broken down into three sections that dictate product category and subcategory. The first four digits of a tariff code represent the general category of the listed product. The WCO adds two or four digits depending on the number of subcategories within a product category. National governments can add two more digits to each product to track product exchanges for statistical reviews. The rule of thumb is that each additional set of digits indicates an increasingly specialized type of product.

Tariff codes are not solely used by the WCO and national governments to collect taxes. A tariff code might be a red flag to security officials tasked with enforcing national trade restrictions. Customs officials might need to inspect perishable and hazardous materials as indicated by tariff codes. Importers and exporters use tariff codes to track the total number of products sold to international trade partners. National governments and international agencies might use tariff codes to gather statistics for trade agreements.

The Harmonized System is available as a searchable database through the WCO website. This premium service allows businesses and government agencies to search tariff codes at any time. Tariff codes in the Harmonized System can be found through keyword searches, code searches and chapter-by-chapter descriptions. The WCO allows subscribers to access the Harmonized System database for up to three years per paid subscription. Database users can also create access codes for up to 50 users during the subscription period.

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Discuss this Article

Fredo
Post 2

What I want to know is this: how long does it take to conduct a Harmonized tariff code search for a specific product when there are 21 sections and 96 chapters to go through?

cupOtea
Post 1

So, the WCO creates these harmonized tariff codes for every product that comes into a member country. It requires members of the WCO to keep up with the codes. I understand this. I even understand the taxation on imports coming into countries, the customs tracking procedures along with the statistical tracking that goes on with the tariff codes.

What I don't agree with is the WCO requiring businesses to pay for access to these records every 3 years. If they are required to keep up with the changing codes and they are taxed on incoming products as well, this is nothing short of putting businesses over a barrel with another fee.

I would say this searchable database that they "allow" people access to after they pay for a 3-year subscription should be free if people are required to know it and use it to do trading with other countries that are a part of this WCO.

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