Harmonized Tariff System

The Harmonized Tariff System (HTS) is an international system of numeric classification of PRODUCTS. With HTS, products are classified using a 6- to 10-digit number. The first six digits are standardized worldwide, while some governments use additional numbers to further distinguish products. Each nation applies its own TARIFF rates on products. HTS classification is important, because most countries apply different tariff rates for different categories of goods. For example, having a product classified as a component rather than a finished product may significantly reduce the tariff on imported goods. Most tariffs are percentage rates applied ad valorem (according to value) of the imported product. Some prices are quoted CIF, meaning the price includes the cost of the goods, INSURANCE, and freight; while other goods are priced FOB (FREE ON BOARD), meaning cost of the goods and all transportation costs to the port of departure plus loading. Some tariffs are applied to the CIF value, while others are added to the FOB value for each HTS classification. The U.S. INTERNATIONAL TRADE COMMISSION publishes the Harmonized Tariff Schedule of the United States Annotated, which provides categories and applicable rates for imported products.