S Codes, HTSUS Codes, and Schedule B Codes are standard terms used in casual conversations between importers, exporters, and freight agents. And while they are used interchangeably to represent the classification of goods, they are not the same.
If you are importing goods into Canada or the US, you need to know the differences between these codes. This article will define these codes and help you understand when, where, and how each one is applicable.
What is a Harmonized Classification Code?
Codes are used to identify and classify goods that are imported and exported across borders. There are three international code schemes used to govern international trade, identify goods, and classify them appropriately. These classification code systems are:
- The Harmonized System (HS)
- The Harmonized Tariff Schedule of the United States (HTSUS); and
- Schedule B
HS Classification, the process of assigning HS codes to products, is done using the General Rules for the Interpretation of the Harmonized System (GRI).
Why do we need a Harmonized Classification System?
In global trade, the classification of shipments is essential. Not only does it help identify duties and taxes owed, but it also helps avoid extra costs and delayed or detained goods. A harmonized, universally recognized classification system makes it easy for importers and exporters to participate in global trade activities while ensuring proper classification and compliance. Harmonized classification also helps determine whether a product qualifies for a preferential tariff under a Free Trade Agreement (FTA).
What is the difference between HS, HTSUS, and Schedule B codes?
For simplification purposes, the Harmonized System (HS) is a universal classification system recognized by 200+ countries and trade partners. The Harmonized Tariff Schedule of the United States (HTSUS) is based on the HS and specific to US imports. The Schedule B code represents specific commodities within each HTSUS category, used for statistical purposes in US export tracking programs.
Now let us talk about these classification codes in more detail:
Harmonized System (HS) Codes
Commonly referred to as Harmonized System (HS), the Harmonized Commodity Description and Coding System is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). It is a comprehensive, global trade product classification system used for customs and tax purposes.
Harmonized System (HS) codes are used throughout the export process for goods. The Harmonized System is a standardized numerical method of classifying traded products. It is used by customs authorities worldwide to identify products, assess duties and taxes, and gather statistics.
Among several industry classification systems, the Harmonized System (HS) is the standard method of identification that ensures the correct classification of goods where import duties are owed by the company importing the goods. It allows exporters to describe their products precisely and importers to assign digits that classify their products.
Administered by the World Customs Organization (WCO), Harmonized System (HS) codes are recognized by 98% of world trade players and partners. While HS codes usually comprise six digits, many countries – including Canada – add additional digits to distinguish products within specific categories.
HS compliance is mandatory for classifying and declaring goods imported to and exported from Canada. If you are a Canadian importer or exporter, it is your responsibility to use the correct HS code (to the 10-digit level) when declaring your goods.
Harmonized Tariff Schedule of the United States (HTSUS) Codes
The Harmonized Tariff Schedule of the United States (HTSUS) – also known as the Harmonized Tariff Schedule (HTS) – is a system used to classify imported products into their respective categories. Specific to US imports, HTSUS is administered by the United States International Trade Commission (USITC) and requested by US Customs and Border Protection (CBP).
The 10-digit HTS codes, also called HTS numbers, are based on the Harmonized System (HS) classification. The first 6 digits represent the HS code, and the last 4 digits are unique to US tariff classifications.
In the United States, commodity duties are assessed based on HTS classification codes. That is why if you are an American importer, it is essential to identify and use the correct HTS code for your goods.
Schedule B Codes
The Schedule B code is a 10-digit international code used only to classify goods exported from the United States. Also known as the Schedule B number, the Schedule B code includes the first 6 digits of the Harmonized System (HS) code followed by 4 unique digits.
Schedule B codes are maintained by the United States Census Bureau and used by the US government for statistical purposes – mainly to monitor US exports. They are officially known as the Statistical Classification of Domestic and Foreign Commodities Exported from the United States.
If you are an American exporter, you must use the correct Schedule B code when filing your export documents.
- The Harmonized System (HS) is a global classification system. Canadian importers and exporters need to use HS codes when declaring their goods.
- The Harmonized Tariff Schedule of the United States (HTSUS) is a classification system specific to US imports. US importers need to use HTS codes when declaring their goods.
- Schedule B is a US-specific coding system used to classify US exports. US exporters need to use Schedule B codes when declaring their goods.