Has your Company Reviewed your Tariff Classifications Recently?
It’s no secret that the current administration has levied record amounts of duty on imports since 2016, which makes tariff classification vitally important.
The proper classification of a commodity is the driver for nearly every component in a cross border transaction. This includes duty assessment, documentary requirements, and the data that may need to be transmitted to satisfy partner government agencies like the U.S. Food and Drug Administration, Environmental Protection Agency, and the Department of Agriculture. Thirty-one percent of this past years CBP’s requests were validating classifications.
Further, the Office of the U.S. Trade Representative has begun offering exclusions to the China 301 tariffs. These exclusions are driven by the tariff number. In order to qualify for the exclusion and successfully obtain a refund of the duties, the goods must be both properly classified and meet the requirements set forth in the individual exclusion. If your goods are misclassified, the process of claiming an exclusion becomes much more difficult.
We encourage our clients to periodically review the tariff codes that are used for their goods. The tariff schedule can change multiple times per year, so a periodic review should be a part of your company’s compliance protocol. The United States International Trade Commission (USITC) makes the 2019 Harmonized Tariff Schedule available online. Even if your company has ‘always used this tariff number’ or if the tariff number as ‘provided by the supplier,’ it may not be correct. Your company is responsible for ensuring the tariff number is accurate.