What Are HS Codes? (2025 Update)
If you ship products internationally, you have likely encountered the term HS Code. But what exactly is it, and why has the 2025 regulatory landscape made it more critical than ever for your business? With strict new rules now in effect from the Universal Postal Union (UPU) and the Gulf Cooperation Council (GCC), compliance is no longer optional.
What is an HS Code?
An HS Code (Harmonised System Code) is a standardised numerical method used by customs authorities globally to classify traded products.
Developed and maintained by the World Customs Organisation (WCO), the Harmonised System serves as a universal language for products. Whether you are shipping a t-shirt to France or a microchip to Japan, the HS code tells customs officials exactly what is in the box without them needing to speak your language. This system is used by over 200 countries and covers more than 98% of world trade.
Beyond simple identification, HS codes are the engine of international commerce. They determine the specific tariff rates, import duties, and taxes (such as VAT) that must be paid upon entry. Furthermore, they flag products that require special attention. This includes safety certificates for electronics, health inspections for food items, or anti-dumping duties for protected industries. Without a valid HS code, a product effectively has no identity in the eyes of the law and cannot legally cross international borders.
Key Takeaway: The HS code is the passport for your product. It dictates how much tax you pay, how fast your goods clear customs, and whether they are allowed into the country at all.
The Structure of an HS Code
Understanding how to read an HS code is essential for avoiding shipping delays. While the codes can look like random strings of numbers, they follow a strict logical hierarchy. A standard HS code consists of at least six digits, which are universal across all participating countries.
Here is how the structure breaks down:
- Chapter (First 2 digits): This identifies the broad category of the product. There are 99 distinct chapters. For example, Chapter 61 covers "Articles of apparel and clothing accessories, knitted or crocheted".
- Heading (Middle 2 digits): This specifies the type of product within that category. Continuing our example, Heading 09 under Chapter 61 (6109) refers specifically to "T-shirts, singlets and other vests".
- Subheading (Last 2 digits): This provides specific details about materials or function. Subheading 10 (6109.10) clarifies that the T-shirt is made of "cotton".
Country-Specific Extensions
While the first six digits are the same worldwide, individual countries add extra digits to gather more granular data or set specific tax rates. This is where complexity often arises:
- United Kingdom: Uses a 10-digit code for imports and an 8-digit code for exports.
- United States: Uses a 10-digit HTS Code (Harmonised Tariff Schedule).
- GCC Countries: As of early 2025, these nations have moved to a mandatory 12-digit system.
Critical HS Code Updates in 2025
2025 has introduced some of the most significant regulatory shifts in the history of modern logistics. Governments have closed tax loopholes and now demand higher data quality. If your shipping data relies on old rules, your packages face a high risk of rejection at the border.
1. The UPU September 2025 Mandate
Effective since September 1, 2025, the Universal Postal Union (UPU) enforces a strict mandate requiring valid HS codes for all commercial international shipments, regardless of value. Previously, postal networks were more lenient than private couriers regarding data quality for low-value items. That era has ended.
This mandate applies to every e-commerce merchant using postal networks to ship goods. Whether you are sending a £5 accessory or a £500 electronic device, if it is a commercial sale, it must carry an HS code. Packages missing this data are now routinely returned to sender or destroyed by customs authorities. This move is designed to digitise global customs clearance and prevent the flow of illicit goods through postal streams.
2. GCC Shift to 12-Digit Codes
Since January 1, 2025, the Gulf Cooperation Council (GCC), which includes Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman, has transitioned to a mandatory 12-digit HS code system. Historically, an 8-digit code was sufficient for this region.
For exporters, this presents a technical challenge. Many ERP (Enterprise Resource Planning) and shipping platforms were originally built to accept only 10 digits. You must update your product classification data to include these additional localized digits. Failure to provide the full 12-digit code now results in shipment rejection at the port of entry, as the new automated customs systems in these nations do not recognise shorter codes.
3. US De Minimis and "Entry Type 86" Changes
A major financial shift occurred in August 2025 regarding US import policy. The "De Minimis" exemption, which allowed shipments under $800 to enter the US duty-free with minimal data, has been suspended for many categories.
This policy change coincides with stricter enforcement of the "Entry Type 86" clearance process. The new "Enhanced Entry" standard demands a 10-digit HTS code for every item. Generic descriptions like "gift" or "clothing" now trigger automatic holds. Merchants shipping to the US must be prepared to calculate and pay duties on almost every package.
Why Are HS Codes Important?
Getting your HS code wrong is expensive. In the world of logistics, accuracy is non-negotiable. Here is why correct classification matters:
- Duty Rates and Financial Liability: The HS code directly dictates the tariff rate. Misclassifying a leather shoe as a textile shoe can cost your business huge sums. Conversely, underpaying duties due to an incorrect code can lead to audits, heavy fines, and your company being blacklisted by customs agencies.
- Customs Speed: Modern customs clearance is automated. When a digital declaration matches the X-ray or manifest data, the package clears in seconds. If the HS code is missing or mismatches the description, the shipment is flagged for manual inspection. This can add 3 to 10 days to delivery times.
- Regulatory Compliance: With the active mandates of late 2025, an incorrect code is no longer just a delay. It is a total blockage. The UPU and GCC systems are binary. If the data field does not meet the new digit requirement, the shipment cannot physically enter the logistics network.
How to Find Your HS Code
To find the correct code for your product, rely on authoritative sources rather than guesses:
- Official Government Lookups: Use the UK Trade Tariff tool for UK imports and exports, or the destination country's customs website. These are the gold standards for accuracy.
- Consult a Licensed Broker: For complex items, such as composite materials or chemical mixtures, a licensed customs broker is invaluable. They can issue a binding ruling request to customs to guarantee your classification is accepted.
- AI-Powered Classification: Modern shipping software platforms like Traddal use AI to suggest HS codes based on your product descriptions. While these are excellent for bulk processing, always have a human expert verify the results for your top-selling items.
Frequently Asked Questions
Is an HS Code the same as an HTS Code?
Not exactly. The HS Code is the universal 6-digit standard used by the World Customs Organisation. The HTS Code (Harmonised Tariff Schedule) is the 10-digit version used specifically for importing goods into the United States. Think of the HS code as the root and the HTS code as the US-specific branch.
Do I need an HS code for samples or gifts?
Yes. Even if a product is a sample with no commercial value, it still requires a valid HS code so customs can verify that the item is legal to import and safe for the public.
What happens if I use the wrong HS code?
Best case, your shipment is delayed while customs asks for clarification. Worst case, you are fined for misdeclaration, the goods are seized, or your customer is hit with unexpected tax bills upon delivery.
