It has now been over six months since the escalation of tariffs between the US and the EU. Businesses have responded differently to the heightened trade uncertainty – some have warned of profit squeezes, others have diversified from the affected markets, and some have shifted their supply chains to mitigate exposure to high tariffs.

Although we’ve seen partial stabilisation through the US and EU Framework Agreement, some uncertainty around tariffs remains. So, what can businesses do to be better equipped to handle this uncertainty?

The solution largely lies in going back to basics. When tariff rates, trade agreements, or other border crossing trade measures are introduced or shifted, identifying an affected product depends entirely on its commodity - or classification - code.

These codes are typically based on the Harmonized System (HS), a globally standardised framework for classifying goods. The six-digit HS codes are used to categorise more than 5,000 product groups and are adopted by over 200 countries worldwide, serving as the foundation for trade statistics, trade negotiations, and regulatory compliance in cross-border trade.

Accurate and up-to-date classification codes have always been necessary - but in a landscape of shifting tariffs and evolving trade policies, their consistent maintenance becomes critical. Ensuring correctness of commodity codes is key to applying the appropriate tariffs, calculating duties and taxes accurately, and maintaining regulatory compliance.

How to keep classification codes up to date

Beyond tariffs, most cross-border trade regulations, and requirements - such as the Carbon Border Adjustment Mechanism (CBAM), the EU Deforestation Regulation (EUDR), and Import Control System 2 (ICS2) - are closely tied to HS and HS-based classification codes. Accurate classification not only ensures the correct payment of duties and taxes, but also significantly reduces the risk of fines, delays, and non-compliance with regulatory obligations

And it’s not only when dealing with trade barriers that having the right classification makes a difference.

As companies evolve and expand, very often the same happens to their product portfolio. Expanding a product portfolio will often increase the complexity of a company’s classification processes. Each product’s HS-based classification code must be determined using a specific set of interpretative rules, in addition to considering factors such as material composition, function, and intended use.

“We sometimes see companies reusing existing classification codes for similar or functionally identical products - however this can cause compliance issues particularly if the new product differs in a way that could change its tariff classification, for example in material, performance specification, processing level, or end-use. Reassessing classification codes needs to be a continuous process,” says Bryan Stocker, Regional Head of Global Trade and Customs Consulting at Maersk.

To reduce the risk of incorrect classifications, businesses can take the following steps:

• Define roles, responsibilities, and processes - Ensure customs and classification responsibilities are clearly documented, communicated, and linked to time-sensitive activities.
• Build and maintain customs expertise - Decide whether customs operations are handled in-house or through a third party, make sure the right competence is in place, and conduct regular trainings on HS classification rules, customs valuation, rules of origin origin, and documentation requirements.
• Keep product and classification data up to date - Maintain accurate and detailed product descriptions and technical specifications. Reassess the classification code whenever a product's design, use, or materials change, and when HS and CN codes are updated (e.g., WCO, EU TARIC).
• Integrate customs into supply chain and systems - Embed customs processes into your supply chains and digital systems to ensure timely, complete declarations. Use automation or workflow tools where possible to reduce manual errors and update procedures when supply chains or systems change.
• Monitor, audit, and improve continuously - Subscribe to customs and trade updates, review how changes affect your business, and conduct regular internal audits to find and fix gaps before they lead to penalties or delays.

Avoid hidden risks and costs of incorrect classification codes

"Staying on top of classification codes remains imperative for businesses facing tariffs and other regulatory measures. For many companies, misclassification of codes is a recurring and costly issue, but it can be avoided,” says Stocker.

Using incorrect classifications for border crossing trade means the business is non-compliant and risks exposure to duty over- or under-payments, penalties and potential supply chain disruptions.

For reassurance against the risk of misclassification, our customs consultants can now conduct a free HS Classification Health Check to assess your classification codes and provide a clear understanding of whether your goods are correctly classified or require adjustments.

As part of the free HS Classification Health Check, our team will:

• Review up to 25 HS classifications from your product list
• Identify incorrect classification codes, mismatches, or potential regulatory issues
• Provide a rationale behind the assessment and recommendations for mitigation or correction

To make use of this limited offer, get in touch and request your free HS Classification Health Check.

For more information on customs services beyond HS classification check, visit our Trade and Customs Consulting page.