What is Harmonized System (HS) Code?

The Harmonized System (HS) is an international nomenclature developed by the World Customs Organization (WCO) for classifying traded products. HS codes are 6-digit numbers (with country-specific extensions up to 10+ digits) that identify what a product is for customs purposes. They are used by over 200 countries and cover more than 98% of international trade. Every product that crosses an international border must be classified with an HS code.

Why It Matters

HS codes determine the duty rates and taxes applied to your products at the border. An incorrect HS code can result in overpaying duties (reducing your margins), underpaying duties (triggering penalties and customs holds), or having shipments delayed or seized. For cross-border e-commerce sellers, accurate HS code classification is essential for smooth customs clearance, accurate landed cost calculations, and compliance with import/export regulations.

How It Works

• Structure: HS codes follow a hierarchical structure: Chapter (2 digits), Heading (4 digits), Subheading (6 digits). Countries add additional digits for national classification. For example, 6403.99 identifies leather footwear not covered by more specific categories.
• Classification: Products are classified based on their material composition, function, and end use. Classification requires understanding the product thoroughly—sometimes even the manufacturing process matters.
• Duty Determination: Once classified, the HS code maps to a duty rate in the destination country’s tariff schedule. Rates vary significantly: some goods enter duty-free, others face rates of 25% or higher.
• Documentation: HS codes appear on commercial invoices, customs declarations, certificates of origin, and shipping documents. They are required for all international shipments.

How Nventory Helps

Nventory stores HS codes at the product level and automatically includes them in international shipping documentation and customs declarations. The system ensures that cross-border orders include accurate classification for smooth customs clearance and correct duty calculation as part of your landed cost analysis.