Accurate product classification is one of the most critical and overlooked elements in global trade compliance.

A small oversight in your HTS (Harmonized Tariff Schedule) or HS (Harmonized System) classification can result in unexpected duty costs, customs delays, or even legal exposure.

1. Relying on Supplier-Provided Codes Without Verification

Suppliers often include HS or HTS codes in their documentation, but those codes are not always accurate for your country or product use.

Different jurisdictions apply different interpretations of the Harmonized System, and a code valid in one region may not apply elsewhere.

How to avoid it:

Always verify supplier codes against your own country’s tariff schedule and product description. Treat supplier data as a starting point, not a final classification.

2. Classifying Based on Product Names Instead of Function

Many misclassifications happen when teams rely on the product name rather than its actual function or composition.

Customs authorities classify goods according to what the product is and does, not what it’s called.

How to avoid it:

Review the General Rules of Interpretation (GRIs) and Section Notes in the HTS. Make sure your classification reflects the item’s essential character, not marketing language.

3. Ignoring Material Composition and Technical Details

A product’s material, structure, or technology often determines its tariff rate.

For example, plastic vs. metal components can completely change the applicable HTS heading.

How to avoid it:

Gather technical specifications, datasheets, or bills of materials from engineering teams. A clear understanding of the product’s composition helps prevent misclassification and strengthens audit defensibility.

4. Using Outdated Tariff Schedules

HTS and HS schedules are updated regularly — usually every five years by the World Customs Organization (WCO) and more frequently by national authorities such as the U.S. International Trade Commission (USITC).

Relying on outdated references can mean using codes that no longer exist or have shifted to new categories.

How to avoid it:

Check for updates annually or subscribe to update notifications from your customs authority. Always reference the most recent HTS edition when classifying goods.

5. Misinterpreting General Rules of Interpretation (GRIs)

The GRIs govern how products should be classified within the tariff schedule.

Misunderstanding these rules — especially GRIs 1, 3, and 6 — is a leading cause of disputes with customs.

How to avoid it:

Train your team on the six GRIs and ensure they can apply them consistently. Use practical examples to illustrate how rules interact when products seem to fit multiple headings.

6. Inconsistent Internal Processes

Many organizations classify products manually across departments, leading to duplicated work, inconsistent codes, and weak audit trails.

Without documentation, it’s hard to defend decisions if customs challenges them later.

How to avoid it:

Centralize classification data and maintain version control. Establish internal SOPs (Standard Operating Procedures) defining who classifies, reviews, and approves codes — and how often records should be updated.

7. Neglecting to Document Classification Rationale

Even when the code itself is correct, failing to record why you chose it can expose your company to compliance risk.

Auditors expect to see a defensible, traceable process — not a guess or a “we’ve always used that code” answer.

How to avoid it:

Keep written justifications for each classification, referencing chapter notes, rulings, or WCO Explanatory Notes. A well-documented rationale demonstrates due diligence and protects you during audits.

8. Not Leveraging Customs Rulings or Precedents

Publicly available customs rulings are an invaluable resource for understanding how authorities interpret specific products.

Many companies overlook them, relying only on internal logic instead of legal precedents.

How to avoid it:

Use databases like the Customs Rulings Online Search System (CROSS) in the U.S. or the EU Binding Tariff Information (BTI) system to compare your case with similar rulings.

Final Thoughts

Classification mistakes are often preventable — they stem from a lack of structure, not a lack of knowledge.

By creating a consistent, documented, and reviewable process, trade compliance teams can reduce errors, defend their classifications, and ensure smoother customs clearance worldwide.

Next Step: Strengthen Your Classification Consistency

Accuracy and consistency are the foundation of compliance.

Explore Trade Insight AI and see how intelligent automation can help your team avoid the most common HTS classification errors.