[TIPS] What Separates Good Classifiers From Great Ones? (Podcast)

Start With the GRIs

Tariff classification rewards precision. GTC instructor Arthur O’Meara tells host Lalo Solorzano the General Rules of Interpretation are the foundation every classifier needs. These six rules govern how products move through the Harmonized System. Skipping past them leads to shortcuts that don’t hold up under scrutiny.

The Notes Change Everything

Section and chapter notes aren’t optional reading. Arthur explains that these notes define materials, set exclusions, and determine whether a product qualifies for a chapter. He points to gaskets as an example — swap the material from rubber to plastic, and the classification can shift entirely. Small details carry real consequences.

Build a Process You Actually Follow

Knowing the rules only matters if a company applies them consistently. Arthur recommends documenting a classification process that reflects actual practice, then sticking to it. That consistency is what regulators look for when assessing reasonable care. It’s also what protects importers when a classification gets questioned.

AI Can Help, But Watch for Bias

Arthur doesn’t dismiss AI tools, but he flags a common trap. Asking an AI to justify a classification you’ve already chosen reinforces assumptions instead of testing them. Sound methodology and human review still matter, no matter how advanced the tool.

Ready to Go Deeper?

Classification questions rarely stay simple for long. GTC’s Tariff Classification course walks through the GRIs and HTS structure in detail. It pairs well with Importing 201 for teams building a full compliance process.

Transcript

Machine Operated

Lalo (00:06)
Week two, here we are. And we got our next tip. And I I I always I always joke around about this, but I’m sorry, these are like total dad jokes, but we’re dressed the same because we recorded everything in one session, everyone. So it’s not like we came back every week and recorded. So anyway, but we’re back on on our tips series here with our Arthur O’Mara. And we covered last week we covered something really although

It’s fundamental but it’s also very detailed on on the inco terms. You know, something people may not even realize and that that was a really good tip, the the repo. if you haven’t heard it, go back and listen to that ’cause it did cover quite a bit of details that some people may overlook on different items when they’re when they’re shipping things and they they tend to maybe not pay t too much attention to their their inco terms ’cause

Everything almost always goes right. But not always, right? So

Arthur (01:04)
That’s right.

Lalo (01:06)
and then last we also referenced Arthur a book, How Things Work. And you you you talked about how that book is really cool on because it teaches you how things function mechanically or electronically might things might function, and how things might be put together, how things get to and that’s real important sometimes because of

when you’re classifying things. I mean you you you kind of need to know the central character. You need to know the primary function. And we always talk about I think we’ve I don’t know if it was you or some of our other instructors always like to use the example of a clock radio, right? And and and

Arthur (01:46)
Mm-hmm. That’s me.

Lalo (01:47)
and it’s a chart yes you and it’s a charging station also for your iPhone, you know, and it has so what is it? Is it a charging station? Is it a

Is it a clock? Is it a radio? You know, nowadays it could be almost some other stuff, right? You know, so like it could be your personal psychiatrist if you have AI built into it, right? You can sit there and ask you questions. But anyway, so should we dig into that then now and

Arthur (02:12)
Yeah.

Lalo (02:12)
dig into tariff classification?

Arthur (02:15)
Sure. absolutely. But first of all, thank you, Lalo, for the opportunity here. I appreciate it. Let’s talk about tariff classification and what separates the good from the great classifiers. And I I there there are really two things that separate good from great tariff classification. Number one is the general rules of interpretation. The general

Lalo (02:36)
Yes.

Arthur (02:37)
rules of interpretation are six little rules, six tiny little rules written by the World Customs Organization.

When they wrote the harmonized system. And these, because they were written by the World Customs Organization, they’re international. me and my training partner in Portugal, we both have the same GRIs. His are in Portuguese, mine are in English, but other than that, it’s the same six GRIs. The second thing that separates the good from the great is the notes. Reading, consulting the notes, the chapter notes, the section notes. And in the United States, we’ve got general notes, general notes one, two, and three are my favorite.

but the notes written by the World Customs Organization, and then there are additional notes written by the United States, called additional US notes, duh, are are great because they they set the boundaries, they give you definitions. For example, the notes to chapter 40 define rubber, the notes to chapter 39 define plastic, all right? And and it doesn’t matter how something is marketed or what the engineer you’re speaking to tells you.

If this O-ring does not meet the definition of plastic in the notes to chapter 39, you cannot classify it in chapter 39. All right. And so we need to be careful about the notes. We need to read them. They define plastic, they define rubber, they define base metal, they define precious metal, et cetera, et cetera. They also define exclusions, right? So there are, for example, in chapter 40, footwear is excluded. You wouldn’t know that if you didn’t read the chapter notes.

All right. Then they define terms like waste pairings and scrap. Wait, we’ll just call that waste, right? Things that end up on the floor of the of the of the factory. Well, there’s a definition of waste pairings and scrap that’s in in chapter 40 for rubber. There’s one in chapter 72 and 73 for steel. All right, we’ve got one for copper, etc. etc. etc. So you have to consult the notes in order to do

Proper tariff classification. And most people don’t. Now, when you consult the notes, eventually you’re gonna start to memorize them and you’re going to learn which of them apply and do not apply to your particular classification responsibilities. Okay. And it’s not just the chapter notes. I’ve been talking about the chapter notes. The section notes, for example, the section notes of section 16, which address chapters 84 and 85.

Have exclusions as well. And here’s a perfect example. You can have a machine classified in chapter 84. It can have a gasket. And depending on the formulation of the gasket, if the gasket is made of plastic, we can classify it as parts of a machine. But if they change the formulation and now the gasket is made of rubber, we have to move the gasket out of chapter 84 and put it into chapter 40, articles of

And you wouldn’t know that if you didn’t consult the notes to chapter 16, which governs chapter 84 and 85. And there’s one little sentence about, you know, articles of section seven, section seven, which is chapters 39 and 40. I know I’m diving into the details, but the thing is, tariff classification is a game of details. This is not meant for someone who’s used to steering a battleship. This is meant for someone who’s used to getting down, you know, getting their hands dirty, and and well, if

If I can use some more metaphors and cliches, splitting hairs and swimming with the weeds, this is how you do terror classification. but I gotta be careful because we only have a few minutes. I could go on for eight hours on this.

Lalo (06:11)
Which you do actually in your classes, so

Arthur (06:13)
Yeah, I do.

I go on for eight hours. So let’s talk about proper tariff classification. When I said, you know, follow the GRIs and read the ch chapter notes and the section notes, and that all is part of what’s called a process. And as an importer or an exporter, and it doesn’t matter, you are required to document your tariff classification process. And I don’t care what your tariff classification process is.

I like to tell my clients to make a flow chart. And your flow chart doesn’t have to be impressive, it doesn’t have to be pretty, it doesn’t have to go on the wall and people go, wow, look at that decision tree. That’s amazing. I don’t care. What matters to me is that when you document your process, it reflects reality. So you write what you do and you do what you write. And that that is not unique to tariff classification. Okay. ISO certification has the same requirements. Everything around business, you know, quality has the same requirement. Do what you say, say what you do.

And that’s part of practicing reasonable care. And US Customs or Customs of Border Protection, you know, in their documents on reasonable care say that an importer has to have a documented tariff classification process. So what customs is looking for is consistency. They’re looking that you have a process that you follow the same way every day. And if your tariff classification is wrong, but at least you’ve followed a documented

Process, well, you’ve practiced reasonable care. And now we’re starting to segue out of tariff classification and get into reasonable care, which is a completely different subject, and that’s another full-day class.

Lalo (07:52)
Yeah.

Arthur (07:53)
In addition to tariff classification. But anyway, yeah. Read the chapter notes, read the section notes, have a documented process, follow your process, don’t care what your process is, just follow it. And I think you’re gonna be good. You well, I I shouldn’t say you’re gonna be good, but you that takes you most of the way there.

Lalo (08:05)
I think in the

Yeah, and I think in this day and age with with all the different tariffs and all the different enforcement and different tools that that that customs is using, that the this this lesson probably should sink in a lot harder for for our audience because in this day and age you just really cannot just lack it. You know what I mean? You cannot just

Arthur (08:35)
Yeah.

Lalo (08:36)
You know, and

Arthur (08:36)
Yeah.

Lalo (08:37)
I’m not gonna say you would you should be should have been doing that even before that, but I’m just saying, you know, now it’s even more important ’cause ’cause it they they can catch it a lot easier. Let’s let’s just say that.

Arthur (08:47)
Well, you know, enforcement has, you know, gone up and customs has publicly stated that it will ramp up enforcement. I’m looking at my calendar. November thirteenth, I think I’m gonna be in Chicago teaching imports two one, and that is a class exactly on how to defend yourself or how to prepare for, I think prepare for is a better phrase, a customs audit, right?

And and the best defense is preparation. And and you know, now more than ever, importers need to be and exporters as well, need to be cognizant of of doing what they say and saying what they do. And if they don’t have a process, they have to and you know, create one and write it down. And and and I think that is a very defensible decision.

you have to prepare yourself because eventually you’re going to get some unwarranted and unwanted I I shouldn’t say unwarranted, but you’ll get some unwanted attention from customs, right? It’s just a matter of time before customs asks a question.

Lalo (09:57)
Right. And one one last thing I want to say about this also is that some people might think, I’ll just throw some AI on it and it’ll it’ll classify for me. But I I feel that that that’s that that that that should or could be done, but to an extent because now there’s US Customs has also come up with this I don’t know what it what what I don’t know what you would call it, but they basically said that you cannot classify that’s a that’s a human

Or you you need to have a human in the loop pretty much and for y for it’s a cannot be when it’s customs business, i it cannot be done with a machine. It has to be done by a human, correct? And so I I

Arthur (10:37)
Yeah. Right.

Lalo (10:38)
can kinda just wanna iterate that as well. So

Arthur (10:42)
Absolutely. So let me tell you a little story. I just wanted to test this. So I went into Chad GPT and I said, Hey Chad, I need you to give me three arguments why the world is flat. And Chad said, No problem, Arthur. Gave me three arguments why the world is flat. All right.

Lalo (11:00)
Ha

Arthur (11:03)
And so basically you can go in there and and tell whatever LLM you’re using.

Lalo (11:09)
Right.

Arthur (11:10)
Say, hey, here’s my product.

here’s the tariff number. I think I’m right and write an argument to prove that I’m right, and it will. Right? So

Lalo (11:18)
It will, right.

Arthur (11:19)
confirmation bias is all it is.

Lalo (11:21)
Exactly. Yeah. Well, awesome. Any quick takeaway on this one or

Arthur (11:29)
have a process and read the notes.

Lalo (11:33)
That’s what you talked about most. And thank you so much, Arthur. That that one will work out.

Arthur (11:35)
Yeah. Thank you very much, Lap.

Lalo (11:38)
we’ll we’ll catch up on the next episode. Thank

Arthur (11:41)
All right, take care. Bye bye.

Lalo (11:42)
you.