Customs 101: What is HS Code?

HS codes are important for properly categorizing and identifying your items as they go through customs. The Harmonized System (HS) is a global standard for categorizing goods in international trade, and is developed and maintained by the World Customs Organization (WCO). HS code ensures consistency in trade practices and supports compliance across the global economy.

The HS code system uses a six-digit classification to categorize goods for international trade. While this structure is standardized, countries often add digits for local needs. For example, Australia’s AHECC provides detailed export classifications, allowing specific identification of products like grains.

Other countries adopt similar systems that tailor harmonized system codes to suit their trade and regulatory frameworks. Extensions may capture information about duties, regional agreements, or statistical tracking. 

Examples of HS Code classification

HS codes allow precise categorization across industries. For example, some common HS codes include: 

02 

Why is HS Code important?

Correct HS code classification ensures goods are categorized properly for tax purposes. Misclassification can lead to penalties or audits. However, the frequency and consequences can vary significantly depending on the country and its customs regulations. Some markets may have stricter enforcement and higher penalties for misclassification, while others may be more lenient.

Correct HS code use prevents unnecessary shipment delays during customs clearance. Incorrectly classified shipments may be flagged for manual review, which can disrupt delivery schedules and increase shipping costs.

For example, if agricultural products are misclassified as hazardous chemicals, customs may conduct additional checks to verify the shipment. This could delay the goods by days or even weeks. Fines or confiscation might follow if authorities determine intentional misclassification.

03 

What happens if you use the incorrect HS code?

As the exporter, you are responsible for ensuring the correct HS code is used.

Customs authorities rely on detailed documentation to verify the accuracy of your classifications, and it's the exporter’s responsibility to provide thorough and accurate paperwork that helps avoid complications during customs clearance.

This includes precise product descriptions, the correct HS code, and consistent information across all forms, including invoices and customs declarations. Supporting materials – such as certificates of origin or technical specifications – may provide additional validation.

Customs authorities may delay shipments to investigate incorrect HS codes, which could result in storage fees for additional time that containers are held at ports.

Fines for misclassification vary but can reach thousands of dollars, depending on the product’s value and tariff implications. And if goods are incorrectly listed under restricted or banned categories, customs may seize or destroy the shipment.

According to US Customs Clearance, non-compliance penalties for using the incorrect HS codes “depend on the level of culpability an importer is charged with and whether duty was lost due to the violation.” Penalties are typically calculated as a percentage of the domestic value of the merchandise.

For example:

*Source USA Customs Clearance.

Repeat violations often lead to audits and heightened scrutiny of future exports.

To avoid making common HS code mistakes:

1. Use government websites, HS code finder tools, or instantly search for the HS code when creating the shipping label using FedEx Ship Manager™ at fedex.com which eliminates the need to switch between different platforms or tools.

2. Stay informed about changes in tariff laws. The customs HS code list gets updated every five years by the World Customs Organization (WCO).

3. Partner with a reliable customs broker who knows the right HS code for your shipments – complying with all import/export regulations

04 

Where to use HS codes?

• HS codes on shipping documents
  HS codes are essential on commercial invoices, certificates of origin, and customs declarations. These documents use the codes to verify goods classification and ensure compliance during customs clearance.

• Determining duty rates and exemptions
  HS codes directly influence duty rates and eligibility for exemptions. Accurate classification ensures duties align with the product type and avoids overpayments or fines. Companies looking to reduce costs must accurately classify goods under the correct code to avoid errors.

• Qualifying for free trade agreements
  HS codes are crucial for proving product origin under trade agreements. Correct classification ensures goods qualify for duty-free or reduced tariffs, meeting the criteria of agreements like AUSFTA. Misclassification may result in loss of benefits.

• Supporting trade analysis
  Governments and companies use HS codes to analyze trade flows and generate reliable trade statistics. Understanding the HS code meaning is essential for businesses conducting market research or planning global expansion. Accurate data helps identify trends and track goods movement efficiently.

You’ll need an HS code for international import and export shipping tasks such as:

• Completing shipping documents such as a shipper’s letter of instructions, a commercial invoice, or a certificate of origin

• Determining duty rates

• Identifying customs duty relief and exemptions

• Qualifying for manufacturer/assembler tariff provisions

• Qualifying for a Free Trade Agreement (FTA)

• Conducting market research and trade statistics

05 

Where to find a HS Code?

Rely on verified customs websites or tools to avoid errors. FedEx Ship Manager™ can assist with HS code identification during shipping label creation.

Using unverified information may result in fines, delays, or misclassification disputes. Proper verification ensures compliance and streamlines customs clearance processes.

The HS code for a product may be different in your country compared to your recipient’s. To avoid confusion, you should get the code from the recipient’s country.

FedEx can help with finding your HS Code in 4 simple steps*

• Step 1: Head to FedEx Ship Manager™ at fedex.com
• Step 2: Log in to your FXE account (Don’t have an account? Sign up now!)
• Step 3: Enter ship destination and item description
• Step 4: Click on HS Code field for your suggested number

*Only applicable for full container load owners.

06 

Next steps for classifying goods for export

To confirm the accuracy of your HS code and ensure compliance, you can consult with customs agencies, check your country’s free government website, or log into our HS code finder.

You could also use HS code search tools such as WCO Trade Tools, FindHS.Codes, Harmonized System (HS) Codes Lookup & Finder.

For goods with ambiguous classifications, exporters can request a formal ruling from customs authorities. This involves submitting detailed product information, such as technical specifications or sample materials.

A ruling provides a definitive HS code classification, which ensures accuracy and prevents future disputes or penalties during export processes.

07 

Conclusion

Using the correct HS codes ensures smooth customs clearance, accurate duty assessments, and trade compliance. Misclassification can result in fines, shipment delays, and loss of trade agreement benefits.

Accurate classifications also support fair duty assessments and access to trade agreement benefits, making them critical for efficient and successful global operations.

Consulting verified sources and using trusted HS code lookup tools helps maintain compliance and prevent costly mistakes.
By prioritizing accuracy, businesses can avoid penalties, ensure smooth customs clearance, and build reliable trade practices.