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What you’ll need to know about HTS Codes in 2022

E-commerce · 3 Mins Read

What you’ll need to know about HTS Codes in 2022

The Harmonized Tariff Schedule (HTS) or HTS Code of the United States is a ten-digit product classification system used by U.S. Customs and Border Protection (CBP) to identify all imported merchandise entering the United States. 

HTS is also referred to as the Harmonized Tariff Schedule of the United States (HTSUS). 

The 2022 HTS will be published on December 31, 2021, and will go into effect on January 1, 2022. This blog post will provide an overview of what you need to know about HTS codes in order to comply with U.S. customs regulations.

What are the changes to the HTS Code in 2022?

Updated once every five years, and another round of edits was made to the HTS Code in 2022. In this round of updates, new products that were previously not well presented are given new categories while obsolete ones are removed. 

For example, smartphones and hybrid vehicles that were not produced and sold at high volumes back in 2017, are now assigned their own custom HS Code category in the 2022 HTS Code classification. 

Other new HS tariff codes are also added for products that have reached critical trade volume. These are some changes made in HS 2022 which includes new classifications for the:

  •  3D printers

  • Cell cultures and cell therapy

  • Chemicals and materials specifically controlled under international conventions

  • Dual-use goods that can be diverted for unauthorized uses such as detonators

  • Electronic waste (e-waste)

  • Flat panel display modules

  • Fully electric heavy-duty vehicles

  • Nicotine-based vaping products intended for inhalation without combustion

  • Placebos and clinical trial kits for health and medical research

  • Rapid diagnostic kits for health and medical research

  • Smartphones

  • Unmanned Aerial Vehicles (UAVs)

What is the role of HTS Codes in Customs?

The HTS Code, just like the Malaysia Custom HS Code, is used by the customs authorities to determine the tariffs and duties of products that are imported and exported. It also helps the authorities keep records of international trade statistics across the 200 countries that adopt this trade system. 

From the importer and exporter point of view, applying the correct HTS Code is essential for complying with custom regulations and ensuring that they are not overpaying or underpaying taxes. Do note that exporting or importing prohibited items and/or submitting the wrong HS code can lead to penalties from the local customs authorities here in Malaysia. 

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Common Challenges

Harmonised System Code classification remains a key challenge for businesses because there are over 5,000 codes to keep track of. This can be problematic, especially for companies that are dealing with an extensive range of products and are shipping them to multiple locations. 

Thus capturing new HS codes and correctly applying them for each shipment can be quite a big task. Adding to the challenge is the lack of a centralised database where the 2022 HTS Code can be updated and shared across all departments. 

This can lead to discrepancies in shipping documents and cause problems when processing goods at the customs. Which is why importers and exporters who are not sure which HTS classification code to use, should work closely with a international shipping expert like DHL Express to prevent problems from cropping up at the customs.

Steps that can be taken to adapt to the 2022 HTS Code

Leveraging the right tools and processes can help importers and exporters better manage the changes coming from amendments implemented in the 2022 HTS Code. 

By implementing automation technologies to streamline updates across all departments and standardising documentations, they can effectively reduce errors and improve productivity.  

Businesses should also establish classification guidelines and document the updated code list for sharing across the supply chain to ensure every partner is kept abreast of changes and can apply them accordingly. 

Are these changes limited to the U.S?

When the WCO updated the 2022 HTS Code, all economies trading in goods that require the use of the HS Code list were affected by these changes. 

As such, this is not a geographical restriction that is limited to the confines of the United States. Companies across the participating nations must quickly figure out how these changes can affect their goods within their supply chain and make the necessary provisions to implement updates, redefine their processes, and disseminate new information for trade compliance.

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