2000 Tariffs Are Changing In 2022: Is Your Tariff One Of Them?

Every 5 years the World Customs Organization (WCO) completes and publishes an updated Harmonized System (HS) Nomenclature. The WCO is an independent intergovernmental body that is responsible for developing international standards to facilitate fair legitimate trade throughout the world. Currently, the WCO has 183 members who represent 98% of world trade. The HS nomenclature is the basis for all member countries’ tariff classification manuals and ensures uniform classification of goods traded internationally. 

The HS is updated in order to stay current with new technologies and inventions, monitor trading trends and goods regulated by international agreements, align WCO members classifications and to remove classifications with low volumes of trade. From the updated document, the Department of Finance and the Canada Border Services Agency (CBSA) develop the new customs tariff book.

For 2022 in Canada, there are over 900 new or updated tariff codes, which result in over 2000 different tariff options because some HS tariff classifications (HS codes) are being split, creating multiple options.

For example: 

HS code 4418.60.00.00 currently reads:
44.18 Builders' joinery and carpentry of wood, including cellular wood panels, assembled flooring panels, shingles and shakes
4418.60.00.00 - Post and beams

As of January 1, 2022, 4418.60.00.00 will be terminated (deleted) and the products formerly classified under this HS code will need to be assessed and assigned a new HS code. The Department of Finance published a concordance table to assist with the new classification that indicates the new tariff may be one of the following:
44.18 Builders' joinery and carpentry of wood, including cellular wood panels, assembled flooring panels, shingles and shakes
4418.30.00.00 Posts and beams other than products of subheadings 4418.81 to 4418.89
- Engineered structural timber products:
4418.81.00.00 Glue-laminated timber (glulam)
4418.82.00.00 Cross-laminated timber (CLT or X-lam)
4418.83.00.00 I beams
4418.89.00.00 Other

This means that your customs broker may be required to ask you for additional information about products that you have imported in the past if your customs documentation is not detailed enough.

In other cases the original HS code from the previous year remains active, but the scope will be changed. Products can be added or removed to an HS code based on new descriptions or legal notes to the HS Tariff. Without careful assessment of the updated HS, goods can inadvertently be classified incorrectly.

For example:

As of January 1, 2022, parts of general use (nails, tacks, screws etc.) that are “specially designed for use exclusively in implants in medical, surgical, dental or veterinary sciences” are now included in chapter 90 as specified by the updated legal section and chapter notes to the 2022 HS tariff. However, the classification numbers where these specific parts were originally classified still exist. This means that your steel screw, specifically made for a hip replacement joint, was previously classified under HS code 7318.15.00.10, is now classified under 9021.31.00.00. But if the HS code is not updated, the former HS code will still be accepted and the screw misclassified.

As an Importer, you should take the time to review the tariff changes to see if your items are affected. If you discover a product's tariff classification is potentially affected, then you need to contact your customs broker. 

And don’t be surprised if your customs broker reaches out to you to confirm the product details needed to correctly classify a product, even if you’ve been importing it for years.

Advanced and National Customs Rulings

For importers who have a binding HS (or origin) ruling from CBSA, you will need to compare the HS code your product has been ruled under to the updated tariff. If the HS code has changed, it is highly recommended that importers submit a request for validation. If there have been any changes made to the product since the original ruling was issued this information should be included with the validation request. While rulings remain in force until they are revoked, there is greater chance your ruling will be revoked if you do not have it validated. Once a ruling is revoked, you must submit a brand new ruling request.

What Can You Do To Prepare?

  • Review the updated customs tariff to see if your products are affected. 
  • Check any binding rulings you have and determine if you or your customs broker will write for a validation.
  • Watch for correspondence from your customs broker (both specifically directed at you and in general) regarding the information needed.

Impact

The biggest impact of this change is that it comes with a cut off date. The new HS codes must be used as of January 1st, 2022. There is no transition period where both the old and the new HS codes will be accepted by CBSA. Customs brokers will be working hard to prepare their databases for the cut off date, but there is only so much that can be done in advance.

If you need assistance with tariff review or ruling validation our Trade Advisory Services can provide you with guidance and assistance.


Disclaimer: While reading, kindly note the date of this blog. At PCB we do our due diligence to write on the most relevant topic every week and naturally content may become dated as developments in a certain program/topic occur. For this reason, we greatly appreciate your readership and hope you continue reading with the posting date in mind. For the latest information on this topic please use our website's search function, or better yet, subscribe to our "Trading Post" newsletter to receive these updates directly to your inbox.
Share this post
About Author
Gloria Terhaar
CCS (CA/US), CTCS, CBSA Prof. Designate

Gloria Terhaar has over 17 years of Canadian customs brokerage experience. She currently works in our Canadian division as a Trade Compliance Supervisor and Regulatory Compliance Specialist. Gloria has extensive experience in all aspects of documentation and regulatory requirements as they relate to importing products into Canada. Gloria is often called upon to train industry with some recent talks for MNP, the Surrey Board of Trade, TFO Canada and the BC Produce Marketing Association. In 2018, Gloria also participated in the Canadian Produce Marketing Association and the Canadian Horticultural Council advocacy event "Fall Harvest" in Ottawa where she participated in advocacy efforts for the Canadian produce industry.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.