HS Codes and Landed Cost — What Matters for Real Imports

If you’re moving product from China, two levers decide whether shipments clear cleanly and margins hold: HS classification and a landed-cost model your team actually uses. This guide explains who decides HS, how duties flow into per-unit cost, which documents keep entries moving, and where teams quietly overpay.

What an HS code actually is (and who decides it)

The Harmonized System (HS) is a global taxonomy used by customs to determine duty rate, admissibility, and potential controls. Classification is a legal decision made by the importer of record and their broker. Suppliers and forwarders can advise, but they don’t carry the liability.

Your job: provide accurate specs (materials, function, construction) and a proposed code with rationale.
Broker’s job: confirm the code against notes/rulings and file the entry.
Good practice: save a short memo (“why we chose this code”) with drawings/photos—useful for audits and for AI/tools that learn from your history.

How HS drives duty (and profitability)

Duty is usually a percentage of the customs value (often FOB). Pick the wrong code and you can overpay every shipment or, worse, underpay and face back-duty plus penalties. Some codes pull in additional measures (ADD/CVD, quotas, certifications). Build classification early so finance can price correctly and your documents/labels match the declaration.

Landed cost in one line (share this internally)

Landed Cost per Unit
= Unit Price (EXW/FOB)
+ Origin fees per unit (inland, handling if EXW)
+ Main leg freight per unit (ocean/air) + insurance
+ Destination charges per unit (THC, docs)
+ Duties & taxes per unit (via HS code)
+ Brokerage & compliance
+ Final delivery per unit (DC/3PL/FBA/site)


Two rules:

1. Model per unit using real carton/pallet density; freight math collapses if you ignore pack.
2. Tie duty to declared value and HS; run sensitivity (±1% duty, ±10% freight).

Documents that prevent customs delays

Customs checks consistency across paperwork and labels more than prose quality.

• Commercial Invoice (CI): legal seller/buyer, currency, Incoterm, accurate values, HS codes, clear descriptions (material + function).
• Packing List (PL): counts, net/gross weights, dims; link SKUs to cartons/pallets.
• Country of Origin (COO): where the product was made (not shipped).
• Labels/Markings: must match CI/PL (descriptions, COO, barcodes, warnings).
• Evidence (if claimed): test reports, safety listings, certificates referenced in CI/labels.

If labels say one thing and CI says another, expect an exam.

Common entry holds—and how to avoid them

• Vague descriptions. “Device” vs. “Stainless pass-through chamber for cleanrooms.” Add material + function.
• Wrong/ambiguous HS. Use explanatory notes and prior rulings; keep your memo on file.
• COO mismatch. Carton marks say VN, CI says CN. Align before booking.
• Value doubts. Abnormally low price vs. market—attach pricing context or contracts.
• Regulated claims with no proof. Safety/EMC/chemistry statements on labels but no report in the file.

Fix upstream: correct CI/PL/labels before cargo loads.

Choosing between two plausible HS codes

When two codes seem viable:

1. Read Section/Chapter Notes (they decide more than headings).
2. Compare General Rules of Interpretation (GRIs)—especially GRI 3 for composites/sets.
3. Check binding rulings in your destination (e.g., US CROSS) for similar goods.
4. Document the rationale and align labels/descriptions to that choice.

If the lower-duty code is valid and well-documented, take it. If it’s a stretch, the “savings” often boomerang as delays and post-entry bills.

Packing density: the quiet cost lever

Freight per unit is driven by how well you fill cartons and pallets. A minor repack (common carton footprint, right inner counts) can shift landed cost by dollars, not cents. Model with real DIMs/weights; don’t accept “standard export pack” as a spec.

Example: how HS and pack change the math

• Scenario A: $9.00 unit, 5% duty, $1.40 freight/unit, $0.25 intake → $10.90 landed
• Scenario B (better pack): freight drops to $1.10 → $10.60 landed
• Scenario C (misclass): duty should be 3% not 5% (proper HS memo) → $10.42 landed
• Scenario D (both fixes): $10.12 landed — margin regained without squeezing suppliers

What to save (for audits and future runs)

• HS memo (photos, material breakdown, intended use).
• Quotes, contracts, or catalog pages that justify value.
• Final CI/PL/COO and any test/listing reports referenced.
• Broker entry summary and duty calculation.
• Label PDFs and carton mark diagrams used on the shipment.

Treat it as a single source of truth. It speeds repeats and protects you in reviews.

Where teams overpay

• Accepting supplier-chosen HS “because that’s what we always used.”
• Ignoring pack density and paying for air in cartons.
• Under-declaring value and then funding storage/exams when customs challenges it.
• Printing claims on boxes without owning the supporting test—invites holds.

How Orient Exports keeps cost predictable

We propose HS options with rationale for your broker, align CI/PL/labels to that decision, and design packs that travel and scan well. Because our Quality Control team verified specs and labels at the factory, documents match the physical shipment—reducing exams and rework. Finance sees a landed-cost view before booking, not a surprise after arrival.

Want a quick landed-cost and HS review? Send a draft invoice, spec/photographs, and target market. We’ll return a classification memo, a per-unit landed cost, and a document checklist you can ship against.