If you are shipping internationally from Canada or anywhere in the world, you would be familiar with the many nuances of international shipping. From customs to restricted items, there are a lot of things that an eCommerce business commits to memory before proceeding to ship internationally. One such major part of international shipping is HS Codes.
Canada relies heavily on HS codes. In Canada, HS Codes are administered by the Canada Border Services Agency (CBSA) and are an integral part of the customs clearance process.
What are HS Codes?
Harmonised System Codes or HS Codes are six-digit codes used in international shipping. They are internationally recognised and are used by the destination country’s customs to know the shipment better.
The HS code can tell everything that one may want to know about the shipment – type of product, duties, taxes and extra fees.
Here’s what an HS code for a 100% cotton shirt shipping from Canada to the US may look like –
6105.10
The first two digits are the Chapter, the second two digits are the Heading and the final two digits are the Subheading.
Why are HS codes important for eCommerce?
The revenue share for Cross-border eCommerce in 2024 is 3.32%. This means that Canadian eCommerce businesses trade heavily across borders. In cross-border or international trade, HS codes impact in more ways than one.
- Maintain a standard process – HS Codes maintain uniformity in international trade.
- Faster customs evaluation – If you get the HS wrong, chances are your shipment will be stuck for days or you will have to pay heavy fines. The right HS code however ensures a smoother journey.
- Minimize lost packages – Since HS codes help tremendously in identifying shipments, the chances of them getting lost are slim.
However, wrong HS Codes can cause fraud and additional taxes. Bear in mind that as a business shipping multiple products, getting the code right is crucial.
How to find the HS Code for a product?
The Canada Cross Border Service Agency website offers access to the Canadian Customs Tariff, which contains detailed information on HS Codes and their corresponding tariff rates. So, if you are on a HS Code lookup, this can help.
Here are a few examples of the most traded products and their HS Codes:
| Product | HS Code |
| Maple Syrup | 1702.20 |
| Instant Coffee | 2101.11 |
| Ice Wine | 2204.10 |
| Ice Skates | 9506.70 |
| Long Boards | 9506.99 |
| Tshirts | 6105.10 |
| Leather Boots | 6403.20 |
| Headphones | 8518.30 |
| Plastic Toys | 9503.00 |
| Wooden Filing Cabinet | 9403.30 |
HS Codes and Tariffs
Different goods have different tariff rates. HS Codes determine which class of goods a particular shipment belongs to and the tariff is levied accordingly. HS Codes play a direct role in determining the tariff rates applied to imported goods in Canada.
Compliance and HS Codes
In order to maintain compliance with Canadian trade regulations businesses are bound to provide an HS Code. If there’s any misclassification of goods, it can delay the shipment for weeks, and lead to audits and also fines.
How to add HS codes on eCommerce platforms?
Now that you know the HS codes, you will have to add them to your labels/product pages. For example, here’s how you do it on Shopify:
- Add HS codes during label purchase
- Add HS codes on the product page
- Add HS codes by using the bulk editor
By providing a universal framework for classifying traded products, HS Codes promote consistency, efficiency, and transparency in trade transactions. This is why they hold tremendous value in international shipping. Know more about international shipping here.
FAQs
- How often are HS Codes updated or revised, and how can businesses ensure they have the most current information?
HS Codes are periodically updated and revised by the World Customs Organization (WCO) Businesses can stay informed about these updates through various channels such as official government websites, trade publications, and industry associations. Additionally, customs authorities and trade experts may provide notifications or guidance on changes to HS Codes and related regulations.
- Are there any resources or tools available to help businesses determine the correct HS Code for their products, especially if they are shipping a wide range of items?
Yes, several resources and tools are available to assist businesses in determining the correct HS Code for their products. The Canada Border Services Agency (CBSA) website offers access to the Canadian Customs Tariff, which contains detailed information on HS Codes and their corresponding tariff rates. Additionally, businesses can utilize online databases, and classification software, or seek guidance from customs brokers or trade consultants to ensure accurate HS Code classification, especially for complex or specialized products.
- Can you provide more information on the consequences of using incorrect HS Codes, such as potential fines or delays in customs clearance?
Incorrect HS Codes can have serious consequences for businesses, including potential fines, delays in customs clearance, and increased operational costs. Misclassification of goods may result in customs audits, penalties, or additional taxes levied by customs authorities. Moreover, delays in customs clearance due to incorrect HS Codes can disrupt supply chains, impact customer satisfaction, and lead to increased storage and handling costs. Ensuring compliance with HS Code classification is crucial for businesses to avoid these potential pitfalls and maintain smooth international trade operations.
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