We have come to the final installment of our series on HTS Codes. The first two parts of the series focused on how to find the correct HTS Code for items to be imported into the US. Now we take a look at the information that comes with HTS codes, and how to understand it.
Please remember, I am not an expert in Customs/Duty/Importing issues. The information in this series is intended to share general information our company has found useful in importing clothing to the US. If you are importing goods into the US, be sure to do your own research, and if needed, find a professional to help you.
How to read the HTS Code pages
In part 1 and part 2 of this series we used a sample product – Knitted Polyester Scarves. We found the correct HTS code was 61171020, the description being: “Shawls, scarves, mufflers, mantillas, veils and the like, knitted or crocheted, of man-made fibers.” Once we located the correct number, we were able to bring up a table of detailed information pertaining to this specific subcategory.
Enclosed below is an image of the information you will find this page for subcategory 6117.10.20.
There are a few key parts to this page that are important to understand. I’ve found that the 2 most important pieces of information on this page are the HTS code, and the Duty Rate. (I’ve put a red block around both of these).
The first box is the HTS code – 61171020. Below it is the description of the subcategory (the same description we quoted earlier). Now let’s move our attention to the bottom half of the chart, where you will find the “Tariff Treatment” section. I have marked the applicable duty rate in red. The duty rate is applied either as a cost by weight or as a percentage of the goods’ value. In this case a percentage is listed, so these goods will be taxed by value, not by weight.
The same rate is quoted both for “MFN” and “Ad Valorem” – so what do these terms mean?
“Ad Valorem” is a tax that varies according to the value of what it is levied on. The duty applied to your goods will be the ad valorem percentage multiplied by the value of the goods.
MFN (Most Favored Nation) is a tax rate offered to certain countries which may be lower than the stated ad valorem rate. The term MFN is generally replaced in the US by NTR (Normal Trade Relations).
All members of the WTO agree to offer the MFN rate to each other. A country can also grant MFN status to a non-WTO member nation. In many cases the two tax rates are the same; this has been true for all products our company has exported.
If the rates differ, further information can be found in the chapter page (the search method we surveyed in the first part of this series – this chapter can be found here). Column 1 rates apply to countries with normal trade relations with the US. Column 2 rates apply to goods imported from Cuba or North Korea. Column 1 rates are further broken down into “General” and “Specific” rates. The general rate applies unless an applicable exception is listed in the “specific” column.
One other interesting thing of note from this page – in 2009, there were $117million worth of scarves imported into the USA. This is wholesale prices. The retail value of those scarves is pretty big. That’s a lot of scarves.
The import-export industry is huge; there is a lot of information to keep track of. Take advantage of resources open to you – there are a lot of people out there you can learn from. A little time and effort spent in research and study will go a long way to building a successful business.