The United States International Trade Commission ("USITC") has finalized recommended modifications to the Harmonized Tariff Schedule of the United States ("HTSUS"). The revisions, which are set to go into effect on January 1, 2022, conform the HTSUS with World Customs Organization ("WCO") amendments to the Harmonized System commodity codes. A detailed report of all changes is available here at the USITC's website.
The Harmonized System is an international nomenclature that classifies products using six-digit codes. Signatories to the Harmonized System Convention, including the United States, agree to classify imported goods using the same six-digit codes in an effort to facilitate trade between countries. Signatories are permitted to further define products beyond six-digits, as the United States does using eight- and ten-digit codes. However, all signatory countries classify merchandise using the same six-digit codes. As a result, while the USITC employs a separate process that allows interested parties to advocate for more specific 10-digit statistical breakouts for classification of merchandise entering the United States, any changes above the 10-digit level, which would impact all signatory countries, must begin with advocacy through the WCO.
There are several potential benefits for having more specific classifications of products. Specific tariff classifications can allow companies and industries to better track trade flows helping to combat trade fraud and facilitate trade enforcement. For companies and industries that sell products globally, a single clear tariff classification can also have substantial trade facilitation benefits.
The WCO's modifications to the Harmonized System are the culmination of a multi-year process (that repeats every five years) and accommodates products of new or emerging commercial significance. In particular, the changes that will take effect in January 2022, include new codes for flat panel display modules, smart phones, 3D printers, and unmanned aircraft. Overall, the USITC implementation of the WCO's modifications will impact the classifications of more than 350 products relevant to a wide-range of industries.
The modifications will not have a tariff impact per se, but importers and customs brokers should nevertheless be aware of the changes to ensure they continue to identify the appropriate classification for all imports.
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