HTS code (Harmonized Tariff Schedule)
An HTS code (Harmonized Tariff Schedule code) is the 10-digit number that classifies a product for US import and determines its duty rate. The first six digits come from the global Harmonized System maintained by the World Customs Organization; the remaining digits are US-specific. Classification is the importer's legal responsibility, and it drives duties, trade remedies, and free trade agreement eligibility.
Examples
Two plausible lines: A machined aluminum enclosure could classify as an aluminum article at one duty rate or as a machine part entering free of duty. On 180,000 units at $6.40, the spread between the two lines is worth roughly $40,000 a year, enough to justify requesting a binding ruling from CBP.
Overpayment recovered: A classification review finds 22 connector part numbers entered under a 2.7 percent line when a duty-free line applies. The importer files post-summary corrections on entries that have not yet liquidated and recovers $31,500.
Section 301 screen: When a new tranche of tariffs is announced by HTS subheading, a trade analyst screens the BOM and finds 64 affected part numbers carrying $5.2M in annual spend, which kicks off resourcing studies on the 12 highest-spend lines.
Definition
Every imported part has exactly one correct classification, and finding it is interpretation, not lookup. The schedule organizes goods by what they are and what they are made of, with General Rules of Interpretation to break ties. An aluminum housing might classify as an aluminum article or as a part of the machine it belongs to, and the two lines can carry different duty rates. Trade remedies such as Section 301 tariffs attach to specific subheadings, so classification often moves total landed cost more than the base rates do.
Misclassification cuts both ways. Classify into a higher-duty line and you overpay invisibly, often for years. Classify into a lower one and customs can assess back duties and penalties under the importer's reasonable care obligation; legal responsibility stays with the importer even when a customs broker files the entry. For contested or high-stakes parts, a binding ruling from CBP settles the question in advance.
The hard part for hardware companies is scale. A 2,000-line BOM means 2,000 classification calls, each kept current as the schedule updates, suppliers move, and origin shifts the tariff exposure. LightSource built an AI tariff tracker that classifies every part on a BOM and flags duty exposure line by line.
Related Terms
*GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and COOL VENDORS is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.