Classification Best Practices
Expert tips for classifying products correctly, avoiding common mistakes, and building an audit-ready classification process that scales with your business.
Start with the Product, Not the Tariff
The most common classification mistake is starting with the tariff schedule and trying to find a code that “looks right.” Instead, begin with a thorough understanding of the product itself. Before opening any tariff database, you should be able to answer these questions:
- What is the product made of? Identify the primary material(s) and their composition percentages. For textiles, this means fiber content; for electronics, the key functional components.
- What is its function or purpose? How is the product used? A product's function often determines which chapter of the HS it falls under.
- How is it manufactured? The manufacturing process can affect classification — for example, whether a garment is knitted or woven determines whether it falls in Chapter 61 or 62.
- How is it packaged or presented? Products put up in sets, retail packaging, or bulk can be classified differently.
Gather technical specifications, material safety data sheets, product photos, and marketing materials. The more detail you have, the more defensible your classification will be if questioned by customs.
Apply the General Rules of Interpretation Systematically
The WCO's six General Rules of Interpretation (GRI) are the legal framework for classification. They must be applied in order — you only move to the next rule if the previous one doesn't resolve the classification. Here's how to apply them in practice:
GRI 1: Terms of Headings and Section/Chapter Notes
Always start here. Read the heading text and all relevant section and chapter notes. In many cases, GRI 1 alone will determine the correct classification. The notes are legally binding and can include or exclude specific products from a heading. Never skip this step.
GRI 2: Incomplete/Unfinished Goods and Mixtures
GRI 2(a) extends headings to cover incomplete or unfinished articles that have the essential character of the complete article. GRI 2(b) extends headings for materials/substances to include mixtures and combinations. This is relevant for products shipped unassembled or made from mixed materials.
GRI 3: Two or More Possible Headings
When a product appears classifiable under two or more headings, apply GRI 3 in sequence: (a) the most specific description prevails; (b) mixtures, composite goods, and sets are classified by essential character; (c) if (a) and (b) fail, use the heading that occurs last in numerical order.
GRI 4–6: Residual Rules
GRI 4 covers goods with no analogous heading (classify under the most similar goods). GRI 5 covers cases, containers, and packing materials. GRI 6 applies the same rules at the subheading level. These are less commonly needed but important for edge cases.
Common Classification Mistakes to Avoid
After reviewing thousands of classifications, these are the errors we see most frequently:
Classifying by end use instead of product characteristics
The HS classifies products based on what they are, not what they're used for. A stainless steel bolt used in aircraft is still classified as a bolt under Chapter 73, not as an aircraft part under Chapter 88 — unless it's designed solely for aircraft use and meets the chapter note requirements.
Ignoring section and chapter notes
The legal notes often exclude specific products from what seems like the obvious heading. For example, Chapter 39 (plastics) excludes articles of Chapter 94 (furniture), so a plastic chair is classified under furniture, not plastics. Always read the notes first.
Using supplier-provided codes without verification
Suppliers often provide HS codes on commercial invoices, but these may be incorrect, outdated, or based on the export country's tariff schedule rather than the import country's. The importer of record is legally responsible for the declared classification — always verify independently.
Copying codes from similar (but not identical) products
Small differences in material composition, construction, or features can change the classification. A polyester jacket and a nylon jacket may have different HS codes. Each product must be classified on its own merits.
Building a Repeatable Classification Process
For organizations with more than a handful of products, ad hoc classification doesn't scale. You need a systematic process that ensures consistency, traceability, and efficiency. Here's a framework:
Intake and Data Collection
Create a standard product information form that captures all data needed for classification: product name, description, material composition, dimensions, weight, function, manufacturing process, and intended use. Require photos and technical specs.
Initial Classification
Use AI-powered tools to generate an initial classification suggestion, then verify against the tariff schedule. Document the reasoning: which GRI rules were applied, which chapter notes were considered, and why alternative headings were rejected.
Expert Review
Have a qualified trade compliance professional review the classification, especially for high-value products, products with complex compositions, or products that could fall under multiple headings. A second pair of eyes catches errors before they become costly.
Approval and Documentation
Formally approve the classification and store the complete record — product data, classification rationale, reviewer notes, and approval date. This documentation is your defense in the event of a customs audit.
Periodic Review
Schedule regular reviews of your classification database — at least annually, or whenever the HS is updated, tariff rates change, or products are modified. A classification that was correct two years ago may no longer be accurate.
Documentation for Audit Readiness
Customs authorities in the US, EU, and UK all have the right to audit your classifications, typically going back 3–5 years. Being audit-ready means having documentation that demonstrates “reasonable care” (the US standard) or “due diligence” in your classification decisions. For each product, maintain:
Product File
Technical specifications, material composition certificates, product photos, marketing materials, and any lab test results. The more detail, the better.
Classification Rationale
Written explanation of why the chosen HS code is correct, referencing specific GRI rules, chapter notes, and any binding rulings or Explanatory Notes consulted.
Review Trail
Records of who classified the product, who reviewed it, when it was approved, and any changes made over time. Timestamped audit trails are ideal.
Reference Materials
Copies of or references to relevant CBP rulings, BTI decisions, WCO classification opinions, and Explanatory Notes that support your classification.
Leveraging Technology and Expertise
The best classification programs combine technology with human expertise. AI tools can process thousands of products quickly and consistently, identifying the most likely HS codes based on product descriptions and historical data. But complex or ambiguous products still benefit from expert review.
When evaluating classification tools, look for:
- Multi-jurisdiction support: The tool should classify for all your destination markets simultaneously, not just one country.
- Official data sources: Classifications should be verified against official tariff databases (USITC, TARIC, HMRC), not just internal models.
- Expert review workflows: The tool should support routing complex classifications to human experts for review and approval.
- Audit trail: Every classification decision should be logged with full traceability — who, when, why, and what data was used.
Start classifying your products with AI
Global Tariff Rates combines AI classification with expert review workflows — giving you speed, accuracy, and a complete audit trail for every product.