HS Code vs HTS Code: What’s the Difference & Why It Matters

A single digit in a tariff code can determine whether a shipment moves smoothly through customs or gets hit with a steep penalty. When Sterling Footwear, for example, misclassified their shoes under the wrong tariff code, it cost them a $1.6 million penalty in a 2017 court case, with an additional $20 million in fines looming. All due to a one-digit mistake in classification. 

Even experienced importers sometimes confuse two deceptively similar terms: HS codes and HTS codes. That mix-up can cause goods to be misclassified, triggering delays and inflating duties. In this article, we’ll discuss what exactly separates these two codes and why the distinction matters so much in 2025, when compliance scrutiny is rising and tariff structures are anything but stable.

HS vs HTS Code: Key Differences

The HS code (Harmonized System code) is an internationally standardized six-digit classification system developed by the World Customs Organization (WCO). Nearly every country uses it to identify and describe products in a consistent way. In fact, the HS is used by over 200 countries and covers thousands of commodity groups, with updates issued on a five-year cycle to keep up with new products and industry changes. This global system helps align classification at a broad level (wood, textiles, electronics, and so on) so that the first six digits of a product’s code mean the same thing worldwide.

The HTS code, short for Harmonized Tariff Schedule code, builds on that foundation by extending the code to 10 digits. It’s used specifically by the United States, where the US International Trade Commission (USITC) and Customs and Border Protection (CBP) add four more digits to refine the classification. These last four digits narrow the category further, allowing US authorities to set precise tariff rates, track trade statistics, enforce trade remedies, and administer quota programs. While the HS portion of the code changes only with WCO’s five-year revisions, the HTS can be revised multiple times in a single year to reflect policy changes or trade deals.

Importantly, both codes start with the same six-digit HS foundation, but it’s the final digits of the HTS that often carry critical policy weight. Two products may share the same six-digit HS code globally, yet in the US their 10-digit HTS codes might trigger vastly different duty rates. One HTS subheading could incur a standard duty while another could fall under a punitive tariff program like the Section 301 tariffs on Chinese goods (even if the two products seem related). Those last four digits can be the deciding factor that puts a product on the hit list for extra tariffs. Assuming HS and HTS codes are interchangeable is a costly mistake. The WCO may set the baseline nomenclature, but the USITC’s Harmonized Tariff Schedule is its own legal instrument. Missing an HTS update (which sometimes comes with very little warning) or using an HS code in place of an HTS code can lead to misclassification.

Understanding the Harmonized Tariff Code Number

Each digit in a harmonized tariff code number plays an important role in identifying the product, explaining its composition, and determining how it’s treated under trade law. Take the code 9506.91.0030. The first six digits (9506.91) identify the product globally as “articles and equipment for general physical exercise, gymnastics or athletics.” But the final four digits 0030 further isolate the item under US rules as “yoga mats” specifically. Under the Harmonized Tariff Schedule of the US (HTSUS), that full 10-digit code carries a particular duty rate (in this case, 4.6% ad valorem) and might tie into specific import requirements. Omit those last four digits, and your entry would be essentially incomplete, and non-compliant for US customs purposes.

More than just a bureaucratic concern, a minor misclassification can impact eligibility for preferential tariff treatment (like a free trade agreement rate), exemption from retaliatory duties, or qualification for import license exceptions. Depending on the product and its origin, using the wrong code could mean paying a few extra percentage points in duty, or tens of thousands of dollars in overpayments or penalties. If a product’s HTS code is wrong, an importer might unknowingly forgo a duty exemption or might not realize their item is subject to an additional tariff. In short, each digit of that code can carry real financial weight.

Why HS and HTS Codes Matter for Customs Clearance

Errors in classification don’t just stall entry, they raise red flags with CBP and can expose importers to compliance audits. Misclassification is among the most common reasons shipments get flagged for inspection, and every extra day a container sits uncleared is a day of delay for your supply chain, not to mention the storage fees and other costs that can build up. 

With country-of-origin verification, product traceability rules, and even the end of the de minimis exemption in the spotlight, smaller importers now face heavier compliance obligations than before. High-duty goods or goods from “high-risk” countries like China are especially under the microscope. In this environment, classification errors, especially on products that carry high tariffs or are subject to special rules, have become central targets for enforcement. A wrong HTS code can look like an attempt to circumvent duties or regulations, even if it was an honest mistake, and that invites scrutiny. 

In light of this, more companies are moving toward AI-powered solutions to get classification right. Gaia Dynamics’ AI classification engine draws on information from up-to-date regulatory databases and CBP rulings to automatically suggest the correct HTS code for a product, backed by precedent and context. This kind of tool flags inconsistencies (like a product description that doesn’t match the chosen code, or a new code update that might apply) and can dramatically reduce friction at the border. The goal of these systems is not to eliminate people, but to augment them: speed up the routine classification work and highlight the tricky issues for experts to resolve. In practice, that means fewer chances to misclassify, and if CBP does question something, you have a data-backed rationale for the code you used. 

Impact on Import Duty from China to USA

Classification is especially critical when importing from tariff-heavy countries like China. While the US-China trade war rhetoric has cooled, most Section 301 tariffs still apply. As of mid-2025, the average effective duty rate on Chinese imports into the US sits at around 52%, with some categories, like semiconductors or EVs, exceeding 100% based on HTS designation.

That means a minor code change can lead to a major cost increase. Intentionally or not, choosing the wrong code can subject goods to tariffs that were never part of the sourcing strategy. CBP expects importers to self-classify accurately. Appeals exist, but they don’t stop initial duty assessments or prevent shipment holds. Importers should also remember: without documentation or legal precedent, their argument might not carry weight.

Conclusion

The differences between HS and HTS codes may seem subtle, but they have real financial and legal implications. And using the wrong one can cost more than just time. As global trade rules grow more complex, getting the HS/HTS code right is not just about avoiding penalties. It’s about ensuring your business keeps moving on time and on budget, despite the minefield of modern tariffs and regulations.