Accurately Report Tariffs With HTS Correction Technology.

The HTS code is a seemingly unimportant data point for most companies and assumed accurate. You receive them as a column of data on a bill of materials (when your vendors are capable) or in materials catalogs updates. Also, as an OEM, you may have staff members who work on the corrections accompanied by a higher cost Sr. consultant who is assigned strictly to Trade & Tariffs routines.

Each code is tied to a commodity class and defined further by the characteristics that commodity or item may have. When a code is applied early in the supply chain it can be adopted throughout several routines until it ends up in an ERP system.

The code sets the tariff rates your company would be required to claim. So what happens when its wrong.

Who Solves This:

Today brokers manage the actual codes but make assumptions based on the packing/shipping manifest. However they do not carry the liability as they are facilitating the transaction of goods inbound/outbound. So when the code is wrong and your goods are seized/delayed/fined the cost is passed through to you.

How Does This Happen:

The code system is much like work we did in the healthcare industry with ICD-9 and then ICD-10. A code was created for a medical procedure so you could file a claim and the code stated what the procedure was for. Eventually it was re-vamped in the United States and re-launched as ICD-10 with over 68,000 from ICD-9’s 13,000 codes. This new granularity meant a complete shift in how physicians would bill insurance companies and how insurance companies could track and control reimbursements. The complexity is in knowing what the code is assigned to.

  • Description: Myotonia congenita

  • Code: G71.12

Logical for a physician. However, a biller or medical coder is doing this.

So the relationship is the same. You have an item in your system which no longer has a description, which would help someone classify it. They are left to guess and or place a generic code which may or may not be accurate. If you take an OEMs HTS requirements its vast.

  • Capacitors, and type.

  • Steel, and fabrication qualities.

  • Gases and chemicals.

This means the tariff responsible person requires the domain experience in a multitude of highly specific areas. So who is responsible, Buyers, Commodities Managers, Logistics ?

What Is The Risk:

The risk is your goods are seized (delayed) and then you receive a fine. The fine is calculated as the total cost of the goods x penalty (roughly 100%) plus fees for administration and people helping solve it.

The larger risk are a track record with miss-identification and creating a historical pattern. Which would be eventually used to pre-screen all duties/goods creating a watch-list.

What Are Some Things You Can Avoid:

  • Incorrect Valuations

  • Tariff engineering and duty minimization

  • Appeals, petitions and protests

  • Fees paid to your broker or logistics firms

  • Fines

  • Lost time and customer delays