Fast, easy HS and tariff code classification

An estimated 380 billion: That’s the number of packages shipped worldwide in 2024. By 2028, that number is projected to hit 498 billion annually. 

This explosive growth represents a tremendous opportunity for retailers — and a colossal challenge for the supply chain and logistics business supporting ecommerce sellers. An environment of dramatic shifts and volatility when it comes to tariffs, de minimis exemptions, and other import rules raises the stakes even more. 

Customers expect free shipping, or at least low-cost shipping. They expect fast delivery, thanks to two-day and next-day shipment options from one particular dominant retail giant. And they expect it all to be seamless.  

Sellers want it to be seamless too — even though many have no idea about what it takes to make all that happen. They don’t know about the Harmonized System (HS) codes used to classify 98% of internationally traded products, the fact that many countries add additional digits to the standard universal six-digit HS codes, or how customs duties and import taxes are calculated. One classification misstep — even something as tiny as, say, using the HS code for a cotton shirt instead of the one for a silk shirt — can result in delays, additional fees, and very unhappy customers. 

But you know. And that’s why sellers turn to logistics partners to handle the details, especially the complex compliance regulations that come with cross-border sales. 

Assigning HS codes to every product for every country can be time-consuming and expensive. Calculating duties and taxes accurately is critical for compliance, but more than a third of businesses say doing so is one of their greatest challenges, according to the Avalara and Censuswide survey.

Going through the process manually takes specialized knowledge of tariff codes and how to classify items using the General Rules of Interpretation (GRIs). It can take a lot of work to find the right code — and talent with the skills to do this accurately can be a challenge to find.   

It’s far too easy to make mistakes in this process, but even when you get everything right, inefficiency eats into profits. And if something goes wrong — if you don’t have the information to determine the correct code, for example, or if a single digit is entered incorrectly — the impact on your clients (and your business) can be significant. Items might be held up in customs, sellers could be subject to fines, and customers may be forced to pay additional duties. Fair or not, these outcomes can reflect poorly on you. 

These risks were present when global shipping was just a fraction of what it is today. Now, with billions of packages moving around the world, tariff wars, and a constantly changing customs landscape, the challenge is even greater. 

A growing emphasis on enforcement worldwide has also created more hurdles for cross-border shipments. Governments are increasingly using tariffs and customs duties strategically to raise revenue and protect domestic economies, and they’re more vigilant than ever about illegal goods. This means they’re upping their game in inspecting imports and ensuring the correct taxes and customs duties are paid for every package.

These efforts include stricter rules, such as European Union ICS2 regulations, the security initiative that screens shipments prior to their arrival in Europe, and the end of the de minimis exemption in the U.S. Authorities are also using more sophisticated methods to inspect and control imported parcels, such as AI, X-rays, and automated checks under ICS2 that can more accurately identify shipments with incorrect HS codes.

Fortunately, just as technology has created a worldwide marketplace, it’s also created opportunities to increase efficiencies in the supply chain. Automated solutions such as Avalara Tariff Code Classification make it possible to classify products with greater accuracy, speed, and efficiency while lowering costs, giving you the ability to better serve your customers and enable them to reap the benefits of global trade.

​Avalara combines ​​AI and ​machine learning ​models trained on millions of curated product listings with expert oversight ​to evaluate each product’s composition, form, and function and to assign the right HS ​and tariff ​codes for the applicable country. Our models are purpose-built for trade compliance and are continuously updated based on high-quality, code-specific product data. 

This enables an accurate determination of customs charges​ and clearance data​, making it easier for exporters to ship goods and importers to create customs entries for smoother operations. The process is also fast, enabling shipments to go out with the speed customers demand, while leaving room for profitability and growth.

Along with accurate HS code classification, it’s important to understand changing import rules and restrictions, which are constantly in flux. Avalara also offers resources to help you keep up with the whiplash of changes to tariffs and import policies.

Stay up to date with newly announced U.S. tariffs by country, affected goods, and current enforcement status using our regularly updated Overview of U.S. tariffs. Our De minimis threshold value by country guide helps you keep track of the latest de minimis threshold values worldwide. And we offer biweekly webinars to help you get up-to-date insights on trade tax and tariff compliance from our resident experts. 

Whether your business classifies thousands, tens of thousands, or even hundreds of thousands of products annually, Avalara automated solutions can help you overcome the massive challenges of today’s cross-border shipping environment, while saving time and freeing up human capital.