The Harmonized Tariff Schedule of the United States (HTSUS) contains over 17,000 statistical categories. Accurate classification determines the duty rate applied to every shipment that crosses a border — and errors in either direction carry real consequences.
The Scope of the Problem
Studies by customs authorities consistently find that a significant portion of import entries contain classification errors. These errors typically arise from:
— Reliance on supplier-provided classifications that have never been independently verified
— Failure to update classifications when product formulations or manufacturing processes change
— Use of the same classification for products that have evolved over time
The Financial Dimension
Overpayment of duties due to misclassification represents recoverable money. When importers pay a higher duty rate than legally required, they have a right to seek refund through a protest filed with CBP — typically within 180 days of liquidation.
Underpayment, conversely, creates liability. CBP conducts focused assessments and may assess additional duties, interest, and penalties retroactively.
Building Classification Discipline
A robust classification program involves:
1. Independent classification review by qualified customs professionals
2. Binding Ruling requests for complex or high-volume goods
3. Periodic audits of existing classifications against the current tariff schedule
4. Clear internal accountability for classification decisions
The Opportunity
For most mid-to-large importers, a classification audit covering three to five years of import history will surface recoverable duty overpayments that can be claimed through protest. The return on this exercise is typically multiples of the cost of the review.