Do you know the difference between HS codes, HTS codes, and Schedule B codes? In casual conversation, exporters tend to use these terms interchangeably; they, for the most part, understand that these are codes representing classifications of products.
While it’s not wrong to use them interchangeably in casual conversation, it is important to understand the differences—if not, you could get into trouble, and your shipment could, too!
Here are the definitions of the terms and examples of use cases when it is appropriate to use each term:
Harmonized System (HS) Code
The Harmonized System classification is a six-digit standard, called a subheading, for classifying globally traded products. HS codes, also called HS numbers, are used by customs authorities around the world to identify the duty and tax rates for specific types of products. You can learn more about these codes in our comprehensive resource for all exporters—Export Procedures and Documentation: An In-Depth Guide.
- HS codes are administered by the World Customs Organization. HS codes are recognized in 98% of world trade. (A Basic Guide To Exporting)
- There are six digits in an HS code. You use an HS code because it is a universal classification tool—many governments add additional digits to the HS number to further distinguish products in certain categories. These additional digits are typically different in every country.
- HS codes are used in most international export documentation and commercial invoices (unless your product falls into one of these categories).
Use Case: You’ll use an HS number when you are referencing the classification with your customers, vendors and anyone outside of the U.S.
When you’re completing export documentation, any documents that are used internationally, like the commercial invoice, should display the six-digit HS code instead of a longer code. (Click here to see a sample of a completed commercial invoice.) If you use a 10-digit code, the numbers may not be accurate for the country of import.
Harmonized Tariff Schedule of the United States (HTS-US) Code
The Harmonized Tariff Schedule code is a 10-digit import classification system that is specific to the United States. HTS codes, also called HTS numbers, are administered by the U.S. International Trade Commission (ITC). It’s very important that all U.S. importers know and use the correct HTS-US codes, because commodity duties are assessed based on this classification. An HTS code takes the same form as an HS code for the first six digits, and then has four differing last digits.
Use Case: If you are a U.S. importer, this is the code you must use. The comprehensive classification list available for free on the ITC website.
You can learn more about HTS codes in our two-part series, The Harmonized Tariff Schedule: General Rules of Interpretation Never Written (But Used Daily) and The Harmonized Tariff Schedule: Beyond the General Rules of Interpretation.
Schedule B Code
The Schedule B code is a 10-digit subset of HTS codes for U.S. exporters. Schedule B codes are used for statistical purposes by the U.S. government to monitor U.S. exports.
- Schedule B codes are maintained by the U.S. Census Bureau instead of the ITC.
- As with HTS codes, the first six digits of a Schedule B code should be the same as an HS number; however, the last four digits may be different even than the HTS code.
Use Case: Companies that export will typically use the appropriate Schedule B codes for their products rather than HTS codes on their export paperwork and when filing their electronic export information (EEI) through the Automated Export System (AES). Since the Schedule B codes are a subset of the HTS codes, it's usually quicker and easier to classify products under Schedule B than HTS.
Companies that are already classifying their products using the HTS codes for their imports may want to use HTS classification for all their products to eliminate the need to classify their products twice—once under HTS and once under Schedule B. That is perfectly acceptable, but do keep in mind that there are certain HTS codes that can't be used for exporting.
Also, the reverse is not true. You cannot use Schedule B codes in place of HTS codes for import classifications.
When Not to Use a Code
Some exporters prefer not to include any HS code on their commercial invoices. It's generated a lot of discussion in the Customs Specialist group on LinkedIn. As a general rule I think it's a good idea to include the proper code on the invoice, but I address some reasons why you might not in our article, Why You Shouldn’t Include HS Numbers on a Commercial Invoice.
Why You Need to Understand These Terms
There are consequences if you misclassify your product. If you’re doing this wrong, you’re committing fraud—and you could face fines and other penalties. Fortunately, there are a ton of excellent resources available to exporters. Here are a few:
- Our Product Classification Trade Compliance Wizard, which can keep you on the right side of regulations by helping you properly classify all your products. You can give it a try for free!
- The U.S. Commercial Service office located near you. The Commercial Service is a great resource for companies that want to start or grow their exports. You'll find a directory of local offices on their website.
- The Trade Information Center, which you can contact at 1-800-USA-TRAD(E) (1-800-872-8723).
This article was first published in November 2015 and has been updated to include current information, links and formatting.