Harmonized Tariff Schedule – Definition

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Harmonized Tariff Schedule of the United States Definition

HTS Codes, also known as the Harmonized Commodity Description and Coding System, or HS Codes, or simply the Harmonized System, is a system for classifying products that are shipped or traded internationally. The system is largely standardized across all developed trading countries. Countries employing this code classify their import tariffs in accordance with these classification codes. The system was promulgated by the World Customs Organization in 1988.

The Harmonized Tariff Schedule of the United States (HTSUS), also known as the Harmonized Tariff Schedule of the United States Annotated (HTSA), is the principal schedule that not only classifies customs duties payable on various goods imported into the United States, but also categorizes US-made goods that are exported to other countries. The classification is based on parameters such as its designation, intended use, and components used during the manufacturing process. The HTSUS then allocates unique ten-digit classification code numbers to all permitted goods. The United States Customs and Border Protection is the sole authority entrusted with dispensing verdicts on cataloguing of imports.

A Little More on What is the Harmonized Tariff Schedule

The function of the HTS code system is to make international trading of goods (import-export) process easier. The codes system identifies and classifies more than 5,000 groups of commodities. The HTS code consists of 6 digits representing a particular class of commodity. The categorization breakdown proceeds as follows:

  • System Sections (21)
  • System Chapters (99) – Only 96 chapters are in use internationally. Chapter 77 is reserved. Chapters 98 and 99 are dedicated for special provisions for individual nations. Chapter 99 also includes specific limitations for code use.
  • Headings (5,000+) – There are thousands of headings. Within these, there are many sub-headings. These serve to indicate a more specific category within any system chapter. The last 2 digits of the code are the most specific, indicating the sub-categories for the product.

Some countries will add an additional 2 to 4 digits to create a specific categorization for the good within that country. These are known as ‚ÄúHarmonized Tariff Schedules‚ÄĚ. The US uses a 10-digit code system, known as ‚Äúschedule B‚ÄĚ numbers. The HTS codes are used for imports coming into the US. The Schedule B codes are used when preparing paperwork for export from the US.

Harmonized Tariff Schedule Codes in the United States

The HTSUS draws heavily from the international Harmonized System, which is an international system of nomenclature mandated by the World Customs Organization (WCO). WCO’s Harmonized System essentially defines a majority of the global goods trade and is a reliable mechanism used by nearly all countries worldwide as a standard for deriving their tariff schedules.

History of the Harmonized Tariff Schedule

The HTS was intended to replace the erstwhile Tariff Schedules of the United States (TSUS) and was incorporated into subtitle B of title I of the Omnibus Trade and Competitiveness Act of 1988. The schedule came into effect on January 1, 1989. As a rule, the United States refrained from implementing the earlier international nomenclatures. However, it still enlisted as an affiliate of the World Customs Organization – the body that had hitherto established the Customs Cooperation Council (CCC) as also the U.S. Customs Service. These organizations had played a vital role in developing the HTS throughout the third quarter of the 20th century.

At the behest of President Ronald Reagan in the early 1980s, the United States International Trade Commission formulated a draft of the U.S. tariff schedules employing HTS terminology. The Omnibus Trade and Competitiveness Act was enacted to replace the Tariff Schedules of the United States on August 23, 1988.

Chapters in the Harmonized Tariff Schedule

The HTSUS consists of 99 chapters categorized under 22 sections. It also comprises of separate appendices for chemicals, drugs, and components of acid dyes. The first few chapters are dedicated to raw materials such as unprocessed goods of plant and animal origins, whereas later chapters deal with processed goods and ready to use equipment such as machinery and electronic appliances, musical instruments, automobiles, fashion accessories and such like.

There is however a bit of ambiguity in classification. For example, toys and fine art are classified separately in separate chapters. Also, there is an unclassified chapter 77 that is set aside for future usage.

References for Harmonized Tariff Schedule

Harmonized Index of Consumer Prices (HIPC)

MONTHLY SEASONAL UNIT ROOT APPLICATION FOR¬†HARMONIZED INDEX OF CONSUMER PRICES¬†(HICP) SERIES AND SUB-EXPENDITURE GROUPS¬†‚Ķ, √ĖZMEN, M., & ŇěANLI, A. G. S.

HARMONIZED INDEX OF CONSUMER PRICES (HICP) An, Supply, D. (2005).

Modeling the¬†harmonized index of consumer prices¬†in the adaptation of the statistical system of the Croatian EU, Gavranovińá, S. (2009).¬†¬†(Doctoral dissertation, Ekonomski fakultet-Zagreb, SveuńćiliŇ°te u Zagrebu).

Long-run determinants of inflation differentials in a monetary union, Altissimo, F., Benigno, P., & Palenzuela, D. R. (2005).  National Bureau of Economic Research. This paper analyzes the long-run determinants of inflation differentials in a monetary union. First, we aim at establishing some stylized facts relating the regional dispersion in headline inflation rates in the euro area as well as in the main components of the consumer price index. The paper aims to show that relative variations in productivity in the non-traded sector is the primary cause of price and inflation differentials, with shocks to productivity in the traded sector being largely absorbed by movements in the terms of trade in the regional economies.

The introduction of the euro and the divergence between officially measured and perceived inflation: the case of Italy, Del Giovane, P., & Sabbatini, R. (2005). L’euro e l’inflazione. Percezioni, fatti e analisi. This paper examines the effect of the euro cash changeover on inflation in different European Union countries. It also analyses the degree of the gap between the perceived prices, and those recorded in the official statistics. The paper further analyses the speed rate of the decrease in this gap in each country, as well as the reason for this surge in price.

Business cycle, interest rate and money in the euro area: A common factor model, Cendejas, J. L., Casta√Īeda, J. E., & Mu√Īoz, F. F. (2014).¬†Economic Modelling,¬†43, 136-141. This paper models and analyze the contemporaneous correlation between interest rate, monetary aggregates, production and prices (of consumer goods, financial assets and real estate) of the euro area.

Analyzing the sustainable energy development in the EU-15 by an aggregated synthetic¬†index, Garc√≠a-√Ālvarez, M. T., Moreno, B., & Soares, I. (2016). Ecological indicators,¬†60, 996-1007. The objective of this paper is to obtain a Synthetic Index of Energy Sustainable Development for EU-15. Based on 33 variables, three indexes are calculated related to energy security of supply, competitive energy market and environmental protection dimensions which are later aggregated into a Synthetic Index. Results show that Denmark, the Netherlands, France, Portugal and UK have the better scores.

Eurozone design and management failures, De la Dehesa, G. (2011).

How do oil price forecast errors impact inflation forecast errors? An empirical analysis from US, French and UK inflation forecasts, Bec, F., & De Gaye, A. (2016). Economic Modelling, 53, 75-88. This paper proposes an empirical investigation of the impact of oil price forecast errors on inflation forecast errors for three different sets of recent forecast data: the median of SPF inflation forecasts for the United States and the Central Bank inflation forecasts for France and the United Kingdom. The paper shows that there is a significant contribution of oil price forecast errors to the explanation of inflation forecast errors. It also shows that the pass-through of oil price forecast errors to inflation forecast errors is typically multiplied by around 2 when the oil price volatility is large.

The conduct of monetary policy under uncertainty, Gaspar, V. (2003, August). Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming (pp. 28-30).

Rwanda and the East Africa Monetary Union, Newfarmer, R., & Söderbom, M. (2012). International Growth Center (March).

Gender-classified imports: Equal protection violations in the Harmonized Tariff Schedule of the United States, Lewis, J. (2011). Cardozo JL & Gender, 18, 171. This paper studies the impact of gender classification in tariff laws on tariff rates. Findings show that the major impact of this condition on tariff rates are disparate results. The paper analyses the causes of these disparities, and explores the moves that has been taken in the past to fight the issue of gender classification. This paper examines how US courts could reduce gender classification by emulating other nations.

Harmonized tariff schedule of the United States (1993). Annotated for statistical reporting purposes, United States International Trade Commission. (1992). Annotated for statistical reporting purposes.

Chewing It Over: Determining the Meaning of Edible in the Harmonized Tariff Schedule of the United States, Baumgartner, B. (2015). U. Kan. L. Rev., 64, 293.

US imports, exports, and tariff data, 1989-2001, Feenstra, R. C., Romalis, J., & Schott, P. K. (2002).  National Bureau of Economic Research. This paper describes the updating of the NBER trade dataset, which now provides U.S. import and export values to the year 2001, disaggregated by Harmonized System (HS), Standard International Trade Classification (SITC), and the U.S. Standard Industrial Classification (SIC) categories. The paper also adds tariff data at the HS level from 1989-2001.

The trade effects of US antidumping actions, Prusa, T. J. (1997). In The effects of US trade protection and promotion policies (pp. 191-214). University of Chicago Press. This paper presents evidence on the effectiveness of AD actions. Using a data set based on the line-item tariff codes identified in the cases, the author examines  the trade patterns of both countries named in the petition and those countries not subject to the investigation. The paper aims to show how the aggressive use of AD law by U.S. firms has peculiar side-effect of benefiting non-named countries who are active in the areas under investigation.

Are we underestimating the gains from globalization for the United States?, Broda, C., & Weinstein, D. (2005). This paper explores how trades have substantially increased the amount of international products available to US citizens in the last thirty years. The paper  finds that the value to consumers of global variety growth in the 1972-2001 period was roughly $260 billion.

In search of substitution between foreign production and exports, Blonigen, B. A. (2001). Journal of international economics, 53(1), 81-104. This study examines product-level data, which more closely fits the assumption of a single-product firm often used in MNC theory, and finds substantial evidence for both a substitution and a complementarity effect between affiliate production and exports with Japanese automobile parts for the US market. This study examines product-level data, which more closely fits the assumption of a single-product firm often used in MNC theory, and finds substantial evidence for both a substitution and a complementarity effect between affiliate production and exports with Japanese automobile parts for the US market.

Do tariffs matter for the extensive margin of international trade? An empirical analysis, Debaere, P., & Mostashari, S. (2010). Journal of International Economics, 81(2), 163-169. Using disaggregate tariff data, this paper studies the impact of changing tariffs on the range of goods countries export to the United States. The paper finds that tariffs have a significant but small effect on the economy and trade flows.

Trade Policy and Export Diversification: What Should Colombia Expect from the FTA with the United States?, Martincus, C. V., & Gómez, S. M. (2010). The International Trade Journal, 24(2), 100-148. This paper checks whether the Columbian exports to the United States has been a case of sectoral concentration, and whether an FTA with the United States would help Colombia diversify their exports. The paper finds, using research, that lower tariffs have favored the Columbian exports, and suggests that the  FTA is likely to induce further diversification, but only up to a certain point.

International trade patterns and policy for ethanol in the United States, Lee, H., & Sumner, D. A. (2010).  In Handbook of bioenergy economics and policy (pp. 327-345). Springer, New York, NY. The paper reviews U.S. trade policy for ethanol and then examines the pattern of imports of ethanol. The paper shows how ethanol imports have responded to market conditions. It finds that  the demand for imports is likely to have been very elastic in recent years. Using this analysis, the paper  discusses the potential impacts of trade policy changes under alternative market conditions that depend crucially on domestic biofuel policies.

Competitive need limits and the US Generalized System of Preference, DeVault, J. (1996). Contemporary Economic Policy, 14(4), 58-66. This paper analyses how the United States uses competitive needs limit to deny Generalized System Preferences (GSP) treatment of imports from developing countries. The paper estimates two different ways in which this treatment is determined. Using both methods, the paper finds that competitive need limits reduce affected imports by 10 to 17%. It also provides the implications of these findings.

Gender-classified imports: Equal protection violations in the Harmonized Tariff Schedule of the United States, Lewis, J. (2011). Gender-classified imports: Equal protection violations in the Harmonized Tariff Schedule of the United States. Cardozo JL & Gender, 18, 171. This paper studies the impact of gender classification in tariff laws on tariff rates. Findings show that the major impact of this condition on tariff rates are disparate results. The paper analyses the causes of these disparities, and explores the moves that has been taken in the past to fight the issue of gender classification. This paper examines how US courts could reduce gender classification by emulating other nations.

Harmonized tariff schedule of the United States (1993). Annotated for statistical reporting purposes, United States International Trade Commission. (1992). Harmonized tariff schedule of the United States (1993). Annotated for statistical reporting purposes.

Chewing It Over: Determining the Meaning of Edible in the Harmonized Tariff Schedule of the United States, Baumgartner, B. (2015). Chewing It Over: Determining the Meaning of Edible in the Harmonized Tariff Schedule of the United States. U. Kan. L. Rev., 64, 293.

US imports, exports, and tariff data, 1989-2001, Feenstra, R. C., Romalis, J., & Schott, P. K. (2002). US imports, exports, and tariff data, 1989-2001 (No. w9387). National Bureau of Economic Research. This paper describes the updating of the NBER trade dataset, which now provides U.S. import and export values to the year 2001, disaggregated by Harmonized System (HS), Standard International Trade Classification (SITC), and the U.S. Standard Industrial Classification (SIC) categories. In addition, U.S. tariff data at the HS level have been added for the years 1989-2001.

Concording US harmonized system categories over time, Pierce, J. R., & Schott, P. K. (2009). Concording US harmonized system categories over time (No. w14837). National Bureau of Economic Research. This paper outlines an algorithm for concording U.S. ten-digit Harmonized System export and import codes over time; describes the concordances constructed for 1989 to 2004; and provides Stata code that can be used to construct similar concordances for arbitrary beginning and ending years from 1989 to 2007.

The trade effects of US antidumping actions, Prusa, T. J. (1997). The trade effects of US antidumping actions. In The effects of US trade protection and promotion policies (pp. 191-214). University of Chicago Press. This paper presents evidence on the effectiveness of anti-doping (AD) actions. Using a data set based on the line-item tariff codes identified in the cases, the paper examines the trade patterns of both countries named in the petition and those countries not subject to the investigation. The paper shows that  because of the diversion of imports, aggressive use of AD law by U.S. firms has the peculiar side-effect of benefiting non-named countries who are active in the areas under investigation.

NAFTA’s and CUSFTA’s Impact on International Trade, Romalis, J. (2007). NAFTA’s and CUSFTA’s Impact on International Trade.¬†The Review of Economics and Statistics,¬†89(3), 416-435. This paper identifies NAFTA’s effects on trade volumes and prices using detailed trade and tariff data. It identifies demand elasticities from the additional wedges driven between consumption patterns in NAFTA versus non-NAFTA countries caused by tariff reductions. Supply elasticities are identified using tariffs as instruments for observed quantities. Using analysis of worldwide trade data for 5,000 commodities, the paper aims to show that NAFTA had a substantial impact on international trade volumes, but a modest effect on prices and welfare.

Do tariffs matter for the extensive margin of international trade? An empirical analysis, Debaere, P., & Mostashari, S. (2010). Journal of International Economics, 81(2), 163-169. Using disaggregate tariff data, this paper studies the impact of changing tariffs on the range of goods countries export to the United States. The paper finds that tariffs have a significant but small effect on the economy and trade flows.

NAFTA at 20: Overview and trade effects, Villareal, M., & Fergusson, I. F. (2014). This report provides an overview of North American trade liberalization before NAFTA, an overview of NAFTA provisions, the economic effects of NAFTA, and policy considerations.

Are we underestimating the gains from globalization for the United States?, Broda, C., & Weinstein, D. (2005). This paper explores how trades have substantially increased the amount of international products available to US citizens in the last thirty years. The paper  finds that the value to consumers of global variety growth in the 1972-2001 period was roughly $260 billion.

China’s rare earth industry and export regime: economic and trade implications for the United States, Morrison, W. M., & Tang, R. (2012).

Market access barriers: A growing issue for developing country exporters, Von Kirchbach, F., & Mimouni, M. (2003). In International Trade Forum (No. 2, p. 25).

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