What Is a Tariff Classification?

Rachel Burkot

Tariff classification is the act of placing import and export goods into categories. Every country has a system for classifying tariffs, and goods that are imported into the U.S. are classified by the Harmonized Tariff Schedule (HTS). The classification decided upon is important because it determines the amount of duty collected on the item. Customs and Border Protection (CBP) is the department responsible for managing tariff classification.

Imported goods are classified and assessed a tariff based on this classification.
Imported goods are classified and assessed a tariff based on this classification.

People coming into a country are responsible for classifying the items they are bringing with them. Using the HTS or a similar classifying device of another country, people must assign a number and classification to each item being imported. The CBP instructs people to use reasonable care in classifying tariffs, so that haphazardly placing items into categories is avoided.

Tariff classification is important because it determines the amount of customs duties and taxes that a company will pay for each shipment. Products are priced with a profit margin in mind, which is determined by considering how much duty will be paid on goods. The classification also depends on several national and international laws and regulations.

In addition to the HTS, other resources exist to help sort through customs tariffs. Software such as eCustoms helps navigate and sort through each tariff and determines which category it belongs in. It has the latest information on tariff classification according to a country’s rules and policies, and it is designed to be easy to use so that the average person has no trouble classifying tariffs with its help.

Customs authority departments in a country are always actively reviewing imported and exported goods to make sure the import tariffs or export tariffs are declared properly. Improper declaration affects factors such as duty rates, import and export prohibitions and restrictions, licensing requirements, origin, commodity inspection, safeguard measures, risk management and trade statistics. The authority department reviews the classification for each item in a customs audit. To be trained to perform a customs audit, the department must be able to answer questions such as how much experience they have with tariff classification, what training and education they have received and how they keep track of changes in the classification system.

Proper classification of tariffs can be overwhelming because there are so many categories, and wrongful classification can lead to overpaid duties. Those declaring goods should make use of all the resources available and do their best to group items the way they were intended to be grouped. Those who do not follow the laws for tariff classification can have their goods seized and held until the rules are obeyed.

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