The Harmonized System (HS) , the international standard for describing and classifying goods for cross border trade.
The HS coding is both simple in its description but can be excruciatingly difficult for specific commodities. International sellers should become familiar with the basic framework and apply HS codes when ever possible.
The HS is administrated by the World Customs Organization (WCO) and serves as the foundation for the import and export classification systems used globally. The HS assigns specific six-digit codes for varying classifications and commodities.Countries are allowed to add longer codes to the first six digits for further classification.
Notes on How to Classify Goods for International Transport
HS Codes and E-Commerce Online Orders
E-commerce online orders - especially from Shopify, eBay and other independent platforms - do not consider H.S. Codes when either selling or shipping. Depending upon the country of destination, the HS Codes can have a varying degree of importance.
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Important Notes on HS codes and Shipping Online orders:
- If the HS Code is known, it should be used
- If the HS Code is not known, a specific description (which could include how the product is being used) is required.
- For shipments valued under "duty free low value thresholds," HS codes are usually not required
- Without HS codes, import brokers often defer to the code with the highest duty (to avoid customs issues). This can lead to over payment of duty.
Review supporting the PDF version with referenced links.
HS Codes: The system used by worldwide customs authorities to classify goods, the Harmonized System (HS) are updated regularly (see section below on latest 2022 updates).
The HS serves as a way for customs to translate product descriptions into commonly agreed nomenclature. The classifications are then used to determine tariffs, admissibility, quotas (if applicable), and trade statistics.
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How are HS Codes Used For Importing Online Orders?
As for all imports, HS codes are used to determine an items admissibility and rate of duty (along with shipment value and country of origin).
The three main factors in determining duty include:
HS Codes and Duty Free Import via Free Trade Agreements
As mentioned above, the country of origin can sometimes qualify the online goods to qualify for preferential duty free entry under a free trade agreement. This includes shipments between Canada, the USA and Mexico under the USMCA/ CUSMA / T-MEC Free trade agreement.
It is important to note that country of origin refers to where the goods were actually made and not from where they were shipped.
Canadian sellers can ship duty-free Canada Origin Goods to
- The UK: UK TCA
- France, Germany and E.U. Countries: CETA
- Japan, Australia, New Zealand, Singapore...: CPTPP
- South Korea: CKFTA
READ ABOUT CANADA'S FREE TRADE AGREEMENTS
Most modern free trade agreements (including those listed above) have provisions for simplified country of origin (COO) declarations for international online orders shipped within the free trade zone. In these case of preferential duty free entry to free trade countries, the HS code is either required or highly recommended.
Even if the goods otherwise qualify for duty free entry, value added tax is most often assessed (see section below on VAT).
Useful information on import duty and how it is calculated.
The Deception of Descriptions: Why HS Codes Exist
Product descriptions are filled with inconsistencies and often contain industry jargon that only professionals within that industry would recognize. See graphic below.
What is a shoe? A brake shoe? A camera shoe mount? Or a pair of wearing shoes? And if a pair of wearing shoes: Childrens shoes, work shoes, casual wear, leather, synthetic..(the list goes on and on!)
Example of HS Codes for Shoes:
- Shoe for wearing (footwear) = HS Code 6404.19
- Shoe breaks in a truck = HS Code 8708.30
- Shoe used in camera equipment = HS Code 8529.90
- Shoe used in a resistor: HS Code 8533.90
Rule of HS classification
To find the correct HS (Harmonized System) code, the first step is simply the product itself. This can include it composition, form and how it used.
- Consult HS code lists of both the origin and destination country. Most country's HS code listings are accessible via a simple google search. While the basic classifications are most often similar there can be meaningful differences.
- Use the classification of the product versus the individual parts.
- If a product can be classified under more than one heading, it should be classified under the heading that provides the most specific description.
- Factors that can affect classification can include the alphabetical order of headings and subheadings as well as explanatory notes of each chapter.
If the HS classification is not obvious, it is best to reach out to brokers, the importers of the product and regulators. Canadian General rules of interpretation (PDF).
General rules of Classification: Essential Character
The most fundamental aspects of classification is a goods "essential character." While HS classification can be complex, the first rules of interpretation are straightforward.
Case Study in HS classification: Ford Transit Connect Import from Turkey
Chapters of the Canadian HS code system
Chapter 1-5: Live animals; animal products
Chapter 6-14: Vegetable products
Chapter 15-24: Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes
Chapter 25-27: Mineral products
Chapter 28-38: Chemicals and related products
Chapter 39-40: Plastics and articles thereof; rubber and articles thereof
Chapter 41-43: Raw Hides and Skins, Leather, Fur skins and Articles thereof; Saddlery and Harness; Travel Goods, Handbags and Similar Containers; Articles of animal gut (other than silk-worm gut)
Chapter 44-49: Wood and articles of wood; wood charcoal; cork and articles of cork; manufactures of straw, of esparto or of other plaiting materials; basket ware and wickerwork
Chapter 50-63: Textiles and textile articles
Chapter 64-67: Footwear, headgear, umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof; prepared feathers and articles made therewith; artificial flowers; articles of human hair
Chapter 68-71: Stone, plaster, cement, asbestos, mica or similar materials; ceramic products; glass and glassware
Chapter 72-83: Metals and articles thereof
Chapter 84-85: Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof
Chapter 86-89: Railway or tramway locomotives, rolling-stock and parts thereof; ships, boats and floating structures
Chapter 90-92: Optical, photographic, cinematographic, measuring, checking, medical or surgical instruments and apparatus; clocks and watches; musical instruments; parts and accessories thereof
Chapter 93-94: Arms and ammunition; parts and accessories thereof
Chapter 95-96: Toys, games and sports requisites; parts and accessories thereof
Chapter 97: Works of art, collectors' pieces and antiques.
There can be some differences in the specific headings, subheadings, and commodity descriptions used in each country.
Getting an Advance Ruling to Ensure the Correct HS code
Importers to Canada can request an advance ruling to verify the correct tariff classification. Request can be made directly to Canadian customs/ CBSA.This option is available to most countries including the USA and to European countries (Binding Tariff Information Decision (BTI).
International Resources for finding an HS code (PDF)
Shipping Below Duty Free Thresholds and HS Codes
To countries with high duty free thresholds, HS codes are less important. In these cases, customs focuses more ensuring the declared value is correct. Read about valuation for international shipments.
The duty free thresholds vary by country and, in some countries, are different based from where and even how the online orders were shipped.
Read about de-minimis values and low value thresholds
Some sample duty free thresholds:
- European Union countries: €150
- United Kingdom: £135
- United States: $800
- Canada: Depending on origin and method of shipping from $20 to $150 (see graphic below)
Duty Free but payment of VAT for Import of online orders
An important note on cross border online shipping is that all imports - even those that otherwise qualify for duty free import - are subject to VAT. In some countries, VAT payment is required by the shipping platform.
PAYMENT OF VAT TO THE UK
PAYMENT OF VAT TO EU COUNTRIES
HS Codes for e-commerce shipments to the USA
The low value duty free threshold to the USA is US$800. Most clearance express (ECCF) and cargo (CFS) processes do not require an HS Code. However, US CBP often holds shipments for inadequate descriptions.
Using Section 321 type 86 entries, e-commerce merchants can clear e-commerce orders via more traditional automated brokerage systems (ABI/ ACE) which require HS codes.
Helpful Links to International Tariff Resources (PDF)
Importing and Exporting from Canada: https://www.tariffinder.ca/en/
Find an HS code for shipping from the USA: https://uscensus.prod.3ceonline.com/
Finding and HS code and Tariff Rate from the USA: https://www.trade.gov/fta-tariff-tool-search
Finding the correct HS code to the UK: https://www.gov.uk/trade-tariff
Find the classification code to and from the European Union
The tariff classification for shipments to the EU is via the European Commission’s Combined Nomenclature (CN). Updates occur regularly so best to confirm the latest version. Note that while the classification is common across the EU, the rate of duty may differ.
HS Code Updates
The International Convention on the Harmonized Commodity Description and Coding System (HS Convention) entered into force in 1988 with major updates around every 5 years.
HS Codes Last Updates in 2022
The latest changes to the HS Code systems were made to reflect technological advances, new types of products and improve trade statistics.
Products and categories subject to change include:
- Electronic waste (e-waste)
- novel tobacco nicotine (vaping) products
- unmanned aerial vehicles (UAVs)/ drones
- smartphones (gain a subheading and note)
- Flat panel display modules will be classified as a product in their own right
- A greater focus on the classification of multi-purpose intermediate assemblies
- Classifications for tools needed for rapid diagnosis of infectious diseases has been simplified
- The category of glass fibres (heading 70.19) and metal forming machinery (84.62) have been refigured
- New subheadings have been introduced for the monitoring and control of fentanyl
- Attempts to clarify text to facilitate better global understanding
- New subheadings for specific dangerous chemicals
The next HS (Harmonized System) code update is scheduled for 2027 (the HS code system is updated every 5 years).
Link to International HS code Resources
